Disclaimer: Its not the "right" way to do it, but if you are considering dropping another engine in it anyhow, this can really help..
Pulling the head isn't that hard.. Headgasket and bolts will set you back only like 60 bucks. May as well throw a timing belt and tensioner on it while you are at it.
Clean the surface of the head, look for any cracks. if its clean, the head is probably flat enough to work..Its still running, so the headgasket probably inst that bad.
Now on the blow by, here's where its definately not the "right" way, but on the other hand, there's little to lose and possibly something to gain.. With the head still off, jack the car up, pull the pan, and remove the pistons by taking the rod caps off and knock the pistons out through the top.. Run a honing stone in the cylinder real quick, throw a 35$ set of rings in it and 20 bucks worth of rod bearings. It adds maybe 2 or 3 hours to the job, costs about 60 more dollars.. While its not a "rebuild" of the bottom end, for 3 hours and 60 bucks it CAN'T hurt.. And it might stop your blowby... It did on my 1.6 before I put in the 1.9....
If you got the time, couldnt hurt to knock the valve springs off and check out the guides, and replace the seals.