well, it certainly looks like the situation is in good hands (yours!)
...$500 is a pretty decent deal for an engine, although you might be able to get a parts car with a decent engine, take the engine, and sell the parts, which means you might actually come out a little ahead (rare with cars).
At the least you can run this idea by the person and maybe get the engine for less...
anyway... changing an engine in is a nice opportunity to change all the other crap, hoses, starter, and clutch, plus clean it and the engine bay up well.... which helps when diagnosing oil leaks.
these are educational cars, no doubt...