If you decide to rebuild the engine, there is little point in not doing a good job. You will need new rings bearings and gaskets. At a minimum I'd expect the cost to reach $2000 and it will quickly go more if you need machine work to true any gasket surfaces or replace the parts.
Another way to go might be to find and engine exchange business and get pricing from them on a good used engine installed in your car. Places like this will warrant their work (not the engine) for at least 30 days so you can be sure everything is installed correctly. Once you have that information, you can go back to the seller and negotiate the price of the car down to offset some of your replacement costs.
As I said previously however, I doubt the issue is cylinder ring related. Rings are a wear item and there are lots of cars, including my own 81 turbo running around with 150,000 miles (and more) with no sign of ring wear. Rings wear evenly on all cylinders (much like bearings) so if only one cylinder is problematic, its likely either something other than the rings or if it is rings, they've been damaged by misuse.
I'd find a z qualified mechanic and have him examine the car. Its ok to buy trouble so long as you know what you're getting into.
Good luck, Dan
