Same dilemma
Hi:
I was faced with the same dilemma about 1/2 a year ago.
My 2002SE Transmission started to slip into F4 and F3 late 2007. The repair bill for that was $7KUSD, decided to wait.
Then one day my KV6 Engine suddenly died in a catastrophic way.
The Land Rover mechanics all told me I needed a New Engine and a Transmission.
Sold a $35KUSD the car 5+ years later for $1400 USD.
A replacement Jatco Box and an Engine cost over $10KUSD remanufactured.
New... probably about $15KUSD the pair.
You may be able to convert the car to the 1.8 Euro Engine and Transmission by having the engine mounting points welded into the body and an electrical harness modification, but I cannot see how this would save any money over remanufactured units.
These cars are a headache, and Land Rover has turned their back on all 02-06 Freelander owners.
What happened here was a design with cheap outsourced parts in key areas.
I cannot say enough about the body and style of any Freelander, they do have the LR toughness. But they mated this wonderful vehicle to a cheaply manufactured Chinese Engine with Epoxied Cylinder sleeves and a Japanese Jatco box that breaks anywhere from 35Kmiles up to about 55kmiles.
All of the systematic issues shared by thousands of vocal and the other thousands of silent Freelander owners fall on deaf ears. Even lawyers don't want to touch this, they say the car is so bad, it would be hard to prove in court a specific issue that was wrong with this car, as there are dozens of specific issues, not just one. Ironic
Some Freelander owners are lucky and their cars break at 80K.
Bought a Mitsubishi Outlander. Never looked back...
You probably could have a custom mechanic drop an engine and transmission in as long as the geometry and interfaces are correctly modified and the electricals are correctly done on the Siemens Engine Control system, not trivial in any way or form.
Today's complex electrical engine control systems don't make engine swaps easy. These things were much simpler back in the days of Distributors, Points, Condensers and Carburetors.
Good luck,
Rich