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I know the regs pretty well (al you need is a book titled FAR/AIM), and as long as an AP checks it over, it can still fly no problem. He could even put a different engine in it (such as a subaru diesel conversion a lot of people do) and fly it, but it would become rated as expirimental.
Also for resale purpose it would be worth more with the factory rebuilt...people know who did the job that way, I know my father can do it, but a buyer will not.
Lastly, the higher you are in the air the safer you are...If you lose an engine you don't drop like a rock, you glide, and the higher you are the further you can glide...Almost no deaths from engine failure, actually when the FAA looks into most crashes, it is almost always Pilot Error, or a mechanical/electrical failure followed by Pilot Error.
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