Why would you expect a job like this to give trouble later? As long as the engine is built correctly then problems are no more likely with a rebuilt engine than with an exchange unit. There is more profit to be made with the rebuild. Any ancillery items which may give trouble would be the same ones fitted to the exchange unit. As long as both the Insurance man and the customer understand this then if there are any further faults, they are just extra jobs.
I had a CDi Merc last Christmas with the same trouble. It is the best paying job that I have ever had. When it came back on two occasions for a turbo and an a/c compressor, i got a profit there too.
I for one love to see this kind of work coming in.