I hate to keep agreeing with the "get a new bus" contingent, but that would seem to be the way to go. I've gathered you live in Alaska, which explains your concern about finding another one; and also finding an available diesel/tranny combo. You might also want a new rear end, too. So, while you've already put $7000 into the one you have. It would cost less than that to find one in the northwest US and drive it up there.
However, it seems you have a real passion for this project, which I admire and encourage. It sounds like you'll have an interesting bus in the end. But, another question: If buses are so hard to find that you bought yours for what you paid, wouldn't there be someone else there looking for one too? I still say sell that one and find one that more suits you. There are so many different options here in the lower 48 :-\
I do understand looking for another one, and all the time involved in finding the right one, and transportation to pick it up, and expense of bringing it back, etc. would be a big pain in the .... I found a lot of skoolies (can't say bus in this forum ;-) that suited me, but were too far away for a quick test drive, so when I found a dealer in my area, I was gladly willing to pay a little extra for mine; just to be able to drive it home in an hour.
On the money invested issue, I have to look at what the current value is. I'm hesitant to put money into something when I'm not really increasing it's value; like I've already put $ into it, and it's not worth $, and putting more money into it will not make it worth any more $.
Anyway, it still seems like you've got a great project that in the end will give you a wild skoolie and an interesting story. And, if you are going to just chop the thing up, why not replace the whole driveline/engine and have a great running bus, too! - oops, I mean skoolie ;-)
We want to see pictures!
