$1600 sounds pretty good to me. you need to check though what exactly 'complete rebuild' includes.
to give you some idea, i've almost finished rebuilding mine from the ground up ... i've replaced a fair bit more than most people would during a typical rebuild
work done by me:
- remove and strip engine
- stripped dizzy etc off head and gave to workshop with cam and valves still in (some very tight screws i though i'd let them strip rather than me...)
- stripped block until just pistons and crankshaft left
work done by workshop:
- cylinders bored, block shaved, head straightened, leak in head welded up, head trued up, polished journals, new bearings throughout, acid dip clean to short motor, machined flywheel
- fitted new pistons, new rings, new valves, new oil pump
- provided gasket set, new water pump, timing kit, clutch kit, engine mounts, other bits and bobs that i can't think of off the top of my head
work done by me:
- reassemble motor (returned to me in same state i gave it to them, pistons installed etc)
- full gasket kit, timing kit, new radiator, new hoses throughout (radiator / air / fuel), new clutch, EF alternator coming soon, new fan belts
- drop engine back in
Total cost thus far ... $2200? Workshop cost me $1700 for the work they did and supply of most of the new parts; additionals have been radiator ($270), small bits (hoses, thermostat, filters, oil, leads, dizzy cap, spark plugs etc) maybe $150.
not cheap. no doubt many on the forums could have done it much, much cheaper by doing more work themselves and replacing less parts (i have replaced pretty much everything that ain't part of the block, head or manifolds!)
i don't regret it as it has been valuable experience for me ... its the first engine i've ever pulled down, as so at least now i've got a chance of troubleshooting / fixing a problem in the bush ... but i won't be doing it again...... next time straight to the mechanic, hand over the VISA, and come back in a week's time
PS the $1600 you've been quoted is almost certainly for a short motor rebuild. my short motor rebuild probably cost around .... $1400? .... the other $800 has gone on the long motor, ie alternator, radiator, clutch, yadayada. if you buy a 4agze for $1200 say, you've still got to fit it up to the box ($300?) and at that point you've now invested $1500 in an engine in unknown condition, with nothing spent on the clutch, engine hoses, leads, radiator, possible rebuild etc. Do all that and you'll be up to $3k in a hurry.
that's the main reason i rebuilt my 1.3 - i'm happy with how it goes, and it's a known quantity. i've put a fair bit of cash into her but am now confident she'll do a good run without much more dosh.