Whatever you do he'll still tell his mates that you wrecked is engine so no goodwill lost
By giving him an engine you are admitting liability, you will then have to guarantee it.
I'm sure if you presented the facts as laid out in your post a small claims court would be sympathetic
i dont play poker but I would say to him if you want to take it further do so and let him do the worrying and work and hiring an expert witness to strip the engine to prove it was your fault.
Barry
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