Rebuild or Refit

[BoCougar]

I have a 1998 Bayliner Avanti. I had a new flywheel installed after a bolt sheared off the starter last fall on one of the engines. Up restarting, water was found in the crankcase. One of the pistons and cylinder wall scoured and they found a leaking headgasket. Any recommendations on how to proceed? Work on the current engine or a shortblock replacement? It's almost August and we have yet to turn a prop! (Mercruiser, 350, Bravo II)

[Terra Nova]

Replace short block.