if you sell the engine and box, that should get you your $3500 back.. rest is profit.
my 33 got rear ended, and i bought it back to strip it down.
i've made probably 7k, and ive still got the gearbox, diff, rims, most of the interior, etc..
if you've got the time, and not desperately after the money, i'd say go for it, its not a quick or easy job though.