Engine Swap, how much?

I've got a friend who just blown a head gasket on her 1992 Civic Hatch. Pretty sure it's a '92. No power options, planejane, probably the weakest engine & tranny in there.

Mechanic says $1500 for the job. I guess head resurface, labor, waterpump, etc. I'm sure they are out to molest her. Anyway, she wants to get rid of it.

I'm looking to make this my daily driver with bigger engine. Don't want to spend much.

Can you guys give me some recommendations for under $2500 including labor? Will the stock AUTO tranny hold the extra power of an engine swap?

Thanks in advance.