"My local guy quoted me $1500 for an engine installation, but i have heard it costs something like $15,000..."
It might appear to be a straight forward question: What does it cost to have a fresh GoWesty engine installed? Just look at any labor guide, and it will tell you how long it should take. Multiply that by the shop's labor rate, add a hundred bucks for fluids—and that should do it, right? But the reality is far from that. Any honest shop should refuse to take someone's hard-earned money for a fresh GoWesty engine, stuff it into their 30+ year old Vanagon, and send them on their way—when, in most cases, the rest of the vehicle is actually on its knees. That is just a disaster waiting to happen.
It is a common misconception that replacing the engine and transaxle in a vehicle makes the whole vehicle "pretty much new again." While those two components are probably the most expensive, replacing them does not, by any means, make a vehicle "like new," and may not increase reliability at all. The engine—and, to a lesser degree, the transaxle—relies on many other systems to keep it alive and well. The intake, exhaust, cooling, fuel delivery, fuel injection, electrical, and clutch systems are all critical to the vehicle's overall health. The entire vehicle is only as reliable as the least reliable component in any of these systems (please read: "Cooling System Overhaul"). Your vehicle, like your body, is a large system made up of many smaller systems. The correct approach is to take a "hollistic" systems approach to your VW, and look at the whole thing. In the long run, this approach can save you a ton of money and heartache.
Indeed, an engine replacement in any older vehicle isn't quite as simple as it first appears. It usually ends up costing a lot more than $1500 to do it right. Heck, at the typical hourly rates shops charge these days, $1500 would barely cover the labor just to remove and install engine, oil, coolant-and nothing else. As old as these vans are, it defies logic that a vehicle as old as any Vanagon is would not require more than just that. The bottom line is this: If you can't afford what it costs to address all the systems on your older, and getting older Vanagon-and have it done right, don't waste what money you do have on a half-assed effort that will ultimately cost you more than you can afford... and will most likely leave you empty handed in the long run.
This reminds me of one of my favorite sayings: "There is never enough time or money to do it right, but there is always plenty of both to do it again!"
So, take your time, do your homework, and find the right shop. Then, and only then will you be poised to do it right, and do it once!