[wcarson]

Here's my take, after owning multiple air cooled car cars over the years:
-The sky is not falling!
-Those quoted prices are RIDICULOUS. Example- Shift coupler bushings for $585, brake hoses for over $1K, etc, etc ...!!!!!?????
-All of these cars need stuff. Your list of things to do are all very easy and DIY, except for the engine stuff. It's pure conjecture the engine needs a rebuild. Do a compression test and leak down on it. It could indeed have a broken head stud or 2. But that's not a huge deal to fix in the big scheme of things.
-If the car is rust fee, clean and straight with respect to paint and body- you likely bought the car pretty well at $51K. Definitely take it to anther shop, or better yet, spend some time learning how to do some of this stuff and enjoy bringing the car up to snuff.
-The biggest thing is the engine. Have someone do a compression test, etc, and get a good feel for what's actually wrong.