Throw a 2 litre or 2.2 in it, they will last longer then the 2.5 for not alot of loss
when it comes down to it, scrap it and spend another couple of grand on another wagon that who knows how good the engine is, or spend the 2k on a decent engine and installation, and have a car that you know where you are at with it.
Case in point although not a subaru, I have just spent $3k on doing a full engine rebuild on a isuzu MU, the old engine developed a bad knock after an overheat,I could of scrapped it then and there and then went and spent anywhere between 2 and 5k on another MU BUT i would be buying a vehicle that I have no idea how good it is, I know that my MU has no rust,has a good trans,and everything else on it is mint, so I dropped 1800 on a rebuild kit( not bad considering it included a new head,pistons,liners,rings, bearing and a full gasket set) I then spent a few hours rebuilding the engine, I will now have a vehicle that will last for another few 100,000 km for 3k