Its an ugly situation for sure. I am still sitting on my Xterra with a blown engine. I was quoted about the same ($8000 for engine and labor). I would certainly explore your options. And I wouldn't have the work done at a dealership, as they will rape you when it comes to cost. I would find a good mechanic who you can trust to do the engine swap. Have your VX towed there and then have the replacement engine shipped there also. If you have the money, I would splurge for a new engine, instead of taking on the risk of a used one.

Either way, its going to be a pricey fix, but it is worth it. Its your VX. Don't give up on it. Good luck.

Bart