I'd be looking at it that a full motor you've found being $7500 as opposed to $10000 for a rebuild... hence I'd go a rebuild but I know that's not what you asked
If it were me and wanting to get rid of the car I'd chance the 3500 one, see if he has a comp test for it then go that way. Remember you are getting rid of it, no point spending the extra money (or hassle selling off peices) if you don't have to.
Just how I look at it