An engine rebuild on this car would never cost £10k. Maybe half that depending on the parts requires, but assuming the head and the lump were ok then maybe £5/£6k, considering its already stripped down its easy to spot what needs to be replaced, what is missing and if anything is broken (although its difficult to determine if anything is cracked without specialist equipment). An old engine like that is pretty simple to rebuild in relative terms to say a modern Maserati. You'd probably spend more on getting a decent respray and getting the interior back up to scratch.
If I didn't have my 3200 I'd be very interested in this, wonder if he'd do a swap?