If you were looking at selling off the car right away, it would be worth getting the sti long motor in for the 5K provided there is some form of warranty included. Most of the time in order to get warranty on the second hand motor they require a new water pump, thermostat, timing belt and a few other parts here and there. Every workshop is different but that's what i would be looking at to have some sort of back up incase it lets loose the first day you drive it home, it's a gamble.

On the other hand you still love the car and in your case you had it for a couple of days and it let go on you. You want to keep it for a while longer than get the 7.5K rebuild done and enjoy the first process of running it in and than get a bit more out of it if what the 205 was pushing wasn't enough and yet still retain reliability.