If you like the car and it's been trouble free, replace the engine and
drive on. Just note that you'll soon have to start replacing suspension
components (mainly bushings, shocks and struts) and other high mileage
wear items. BUT... the car will last forever with care and, considering
your aversion to buying a used 960, irreplaceable. However, note that I
just purchased a creampuff 1996 960 wagon (70k miles, one owner with
records) for $6400 and there are several on ebay right now.
Goodluck!