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Hi Tim,
I just bought a 1968 912 a few weeks ago and also looked into a Type 4 engine as it has lots of readily available parts compared to the 912. The problem is you need several aftermarket adapters, costing anywhere from $400-500, as well as various other adaptations that that add up to a lot of money. A 6 cylinder Porsche engine woudl be quite a chore and require a good mechanical aptitude in my opinion.
I decided to rebuild my 912 engine rather than swap in a Type 4. It had a blown cylinder so cost to rebuild will prbably be in the $1500 neighborhood. Four new cylinders and pistons were $530 alone! If you can find, as the other guys suggested, a running 912 engine, buy it, drop it in and go for a spin.
That's my 2 cents worth. As someone said recently, you can put anything in one of these 912s as long as you don;t mind spending the money to do it!
You should also know that the 1968 model wasn't very popular with Porsche enthusiasts because it was the first year Porsche put a bunch of crappy emission control equipment on it for import into the US. Seems a lot of people removed it over time. Mine came with it all missing and the engine ran fine without it (before it blew!). While I didn't own it when it blew, I have a pretty good theory as to why it happened. Several owners before me thought an after market oil cooler, of the raditator-fin variety with a screw-on contemporary filter, would be better than the stock setup. I think the oil cooler (radiator) wasn't mounted in such a way that it could get good circulation and it over heated. Hence, I wouldn't recommend after market cooling unless it's high end stuff.
Good luck!
Bill
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