Thanks for your input. If this car wasn't my daily driver, I would probably have an idea of the condition of the heads right now, thus ending speculation. I know my mechanic was trying to prepare me for the worst, but his insistance on new parts has lead me to question his judgement
Equally frustrating is that other than blowing out a quart of oil a week
my engine is running great (it has just had the mothballs taken out of it after a four year ciesta in my parents garage (yes, I have tried to get the rings to re-seat, but I had this problem before I put the car to sleep).
I am planning on taking the heads out myself and finding a good machine shop that will give me a fair evaluation (if I have to buy new heads, then that is what I need to do).
As far as the potential for using the 1.8 heads, Tom Wilson's book says that the valve sizes for the 1.8 are 41mmX34mm, and also states the 2.0 valves as the same size. I guess this is an error based on the sizes that are in the Pelican catolog (2.0 is 42X36). I guess I would also have figure out different sheet metal and intake manifold. Hopefully I won't get this far though.
I will post an update to let anybody interested know what happens. This bulletin board has been an invaluable resource for helping me out!