I'm saving up to drop 3,500 on my rebuilt engine or saving up double that to put a 2jz in it.......

That is pretty much what my car is worth but I don't care because it is the car I want to keep around for a while. I don't plan on jumping from car to car like most of you Honda owners that are 18 and have had about 20 cars.
It doesn't matter if the rebuild is going to cost more than the car. If she LIKES the car then keep it around for a while. It's her choice to do with it what she wants.
What I am doing is probably not the logical thing to do but that is what a car enthusiast of a certain type of car does.