You've got nothing to lose by gutting the cat, changing the oil and just seeing how long the car will run.
You can then locate an engine at your leisure.
Who's to say the gloom and doom story about the engine is not to get you to drop a load of money you weren't planning to spend.
Besides, whats the worst case scenario, you blow the engine? You are already planning to replace it. This seems a gamble worth taking on a car with 127K miles. Something else can break tomorrow.
Gut the cat and see if it will run.
TB
