At auction I bought an 07 as a run and drive hail damage. Long story short the engine has holes in the crankcase from rods that aren't doing what they are supposed to do. I have access to an 2010 model that has a good engine. Will the 10 fit and work in the 07? Or should I just scrap it and kiss the 4k goodby?
Welcome to PriusChat!! The gen3 engine will not fit a gen2, check for a replacement at : Car-Part.com--Used Auto Parts Market
I wouldn't scrap it, do as SFO says. For a Gen 2, you should be spoiled for choice and not very expensive at that, especially if you can do the swap yourself.
Good LORD GenII's are expensive in Montana! Given what you have into it, replace the engine, like-for-like (GenII).