4AGE motors had a odd ball thermostat, and if the system was not properly maintained, I.E. you would get air in the coolant track.. The thermostat would not open, and the system would reverse the hot coolant would burn off in the block, and appear to look like the head gasket was shot..
The way to fix this, is you would have to 1. make sure their is no internal damage from this happening, any kind of binding on the cyliner walls, from lack of lubrication, if all checks out, make sure you replace the gaskets as needed, and the thermostat.. the water pump can also cause this issue, as they had issues with heat issues in the Rear engine 4age's..
Honestly the motors are not that expensive, it may be cheaper to look for a Black top or Silver top and donate that to the car..
Black tops 163HP 20 Valve Higer compression not good for turbo's 11:1
Silver tops 160HP 20 Valve Redline 8K 10:5:1
Or if your lucky and can find a 4AGZE which was the supercharged MR2's
160HP but had 160 Lb Ft Tq (internals are good for 300+HP with minimal mods)
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