1994 Mustang GT 5.0 – What Would You Do?

What would you do presuming the following? I want to keep my 94 Mustang GT with 5-speed stick. The engine is weak meaning it blows blue smoke out tailpipe under very hard acceleration. Pro mechanic I use recommends not rebuilding this engine due to unknowns but instead replacing it with a rebuilt engine (like a Jasper). In my State, since it’s 94 I do not have to have emission test BUT an emission testing site is supposed to look to see if the emission equipment is still there (which I take as meaning, it just has to be there but does not have to work). That does not mean I have to do something where I am bypassing that equipment. To be honest, I bought it thinking “ok, no emissions test!” The car functions as is. It does fine as a “daily driver” but I don’t drive it daily (reason: depending on weather, I drive other stuff just to keep batteries up in the other stuff). I want it to be dependable. I’d like it to also be something I could autocross for fun on occasion. I’m also thinking about using it for a road rally (not a high speed (aka illegal) rally) that would have stops at tracks and drag strips. I would NOT be changing it so it’s super fast – decent gas mileage is still important. So, what would you do?