Why do so many people come here looking for advice, then receive the advice .... And then do the complete opposite of the advice?
Look OP, its your money so do what you want. But its pretty convienient they sold you a car with a bad motor, but just happen to have a guy that can do it for you at cost. Oh, and BTW ... 5K for a shortblock install is what you will pay anywhere ... They are not giving you a deal.
Anyways, just do us all a favor and don't bother asking for advice if you have no intentions of following the advice.