Almost nothing is too far gone, it just depends on how much time one is willing to give to rebuilding it. On a M38A1 build a few years back, the only thing keeping the cowl attached to the rest of the body was the door sill. It took a lot of man hours to square everything up, and replace the sheet metal. I was supplied with three donor A1s, so I had a descent amount of original sheet metal, plus one to take measurements from. Still, there was a lot of time invested into the project.

A diesel would be a good fit. I've read about an outfit that has done some Kubota tractor engine swaps, with much success. I would possibly look toward a 4-71 Detroit 2 stroke....Why, that I can't answer. I like noise and leaks.