A two stage cooling system pressure test will tell you if an engine is viable or scrap metal.
- Stage 1 - Test the entire system excluding the water pump. If it holds pressure, you're good. If not, proceed to . . . .
- Stage 2 - Test the manifold separately. If it doesn't hold pressure, good. The manifold is easily replaceable. If it holds pressure, the block must be considered junk.
This testing protocol is not 100% conclusive but close enough for a quick assessment.
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I purchased a 78' Catalina 30 at rock bottom price mainly due to the condition of the gas A4 raw water cooled engine
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That means there should be some budget left for engine work and whatever else is needed. Where did that $10K repower figure come from? Are you including a professional Rolls Royce mechanic to do the work?
I would go ahead and look at the engine for sale today and make the sale contingent on the aforementioned pressure test as well as the tests you mentioned. For the right price it could be a great source of spare parts at the least.