First an enthusiastic thanks to all who responded with ideas.  The 
     noise was definitely in the engine and most noticeable on the left 
     side.
     
     Happily, the operational word here is "was"; a can of Alemite CD-2 did 
     the trick.  Funny, I would have thought that the last treatment (done 
     3000 miles ago - 2000 miles prior to the last oil change) would have 
     taken care of the problem.  I mean, if the grief is a sticky lifter 
     and one runs what is essentially a detergent additive through it for 
     2000 miles, and the problem "goes away", then why does it come back 
     1000 miles after the additive is dumped with the oil change?  Did 
     someone put extra "gum" in my Castrol 20W-50?  Will I have to add 
     Alemite with every oil change from here on out?  Will Dudley Doright 
     save the day?
     
     Meanwhile, I did a lot of research into getting or building a new 
     engine.  Rather than let it all go to waste, here's a summary along 
     with some generalizations of the comments received regarding specific 
     engine sources.
     
     AVP
     Sacramento CA
     http://www.sacbiz.com/avp/
     1-800-548-5766
     1.9L  1750.99
     2.1L  1750.99
     Core   600.99
     
     Fast German Auto
     Santa Ana, CA
     http://www.fastgermanauto.com
     1-888-211-3334
     1.9L  1599.00
     2.1L  1599.00
     Core >1000.00 (I forgot the exact figure - not on the web page)
     
     GEX
     Baldwin Park, CA
     http://www.gexintl.com/
     1-800-543-6805
     1.9L  1799.00
     2.1L  1999.00
     Core   600.00
     
     Observations:
     
     I did talk to all three companies on the phone - FGA was the most 
     talkative - the other two exuded more of a "trust us" feeling without 
     volunteering too many details.
     
     Of the three, Fast German Auto is also the most "interesting".  
     Besides being (on the surface, at least) the lowest cost source, they 
     claim to use NEW heads (are new heads really that easy to get a hold 
     of?) and NEW lifters along with the other expected new parts.  They 
     also apparently ship the engines with flywheels installed rather than 
     you having to set up the end play.   Finally, they claim to know a 
     handful of assembly "tricks" which contribute to the longevity of 
     their engines.
     
     All three apparently have the shipping (air) thing down.  Seems like 
     you can expect an engine in 2-3 days (after it's built).  Essentially, 
     if I would have ordered yesterday (Wednesday the 16th), I would have 
     an engine on Friday the 25th.  BTW, you pay the shipping (both ways); 
     estimated cost is in the $200-300 range round trip.
     
     I had no idea going into this if align-boring was an issue with the 
     Wasserboxer.  FGA said their cases were stock and intimated that the 
     WB is strong (like the Type IV) and doesn't usually suffar this 
     problem.  They also said that their cranks are turned no more than 
     .010/.010.
     
     BTW, all options included the oil pump (new from FGA - the others, I 
     don't know), but not the water pump (probably should buy a new one).
     
     Customer Comments (from among your fellow listies):
     
     AVP - Largely an unknown quantity.  One respondent (a somewhat 
     satisfied FGA customer) indicated he would try them "next time" since 
     they were near by.
     
     FGA - The "somewhat satisfied FGA customer" had installed a Type IV 
     engine from these guys, and indicated that he was pleased with the 
     engine.  On the other hand, he intimated at feeling a bit "taken" over 
     shipping and bad core issues which had doubled the ultimate cash 
     outlay over the advertised engine price.
     
     GEX - Was it "pick on the (apparent) big guy", or is this really the 
     least desireable option?  One customer complained about a cracked and 
     leaking head early on in a GEX engine experience.  GEX earned points 
     from him for shipping a replacement head and paying $300 of the $350 
     local shop labor charge, but lost points with the customer for taking 
     many days to do it (and for the problem in the first place).  Other 
     unquantified comments seemed to indicate near-universal condemnation 
     of GEX as a long-term solution for any VW engine.  Will anyone 
     "champion" GEX?
     
     Peripheral Comments:
     
     One respondent expressed satisfaction with VW itself!  He did pay over 
     $2K for the engine and the core deposit was steep ($1300), but he 
     appreciated the 90-day time frame he was given to complete the job and 
     turn the core in (guess he wasn't dealing with a daily driver).
     
     Another listee indicated that when (or before) that fatefull day 
     comes, he will be doing the Kennedy/Subaru 135hp thing.
     
     Finally, a few folks were very encouraging about the idea of doing it 
     oneself.  Discounting FGA's alleged "tricks", I agree with the idea of 
     "if you do it yourself, you know what's in it" as both a source of 
     great satisfaction (and trepidation at first start-up), and 
     unparalleled peace of mind.
     
     Local prices on machine work for the crank and rods are about the same 
     as for other engines.  P & L sets, bearings, cam, and lifter prices 
     are similar to that for Type IVs.  The gasket set will "set" you back. 
     The big unknown will always be the heads - my approach is always to 
     plan on and expect the worst - then you can only be pleased with 
     whatever happens (and take the SO out to dinner on the money you 
     "saved" because the heads were rebuildable)!
     
     -Blaine