Engine Mechanical problem
2003 Honda Element 4 cyl Two Wheel Drive Automatic

I've taken my vehicle to the Honda dealer and to my local mechanic. Both have advised me that I neededto replace my engine due to compression loss. The dealer quaoted $4,600 and the local mechanic quated $2,500 to $3,000. I have a friend who is a mechanic who quoted me $1,600. The deal and the local mechanic would replace with an engine that 40,000 miles on it. My riend can get a hold of one with 56,000 miles on it.
Any advice on wich route to take. Is there a local network of independent mechanics out there. I licve in the Bay Area (CA).

Thanks

A J