Call Ichiban and enquire about a replacement 2.5L DOHC motor. It'll probably cost you $1000 at the most, and if you are even moderately mechanically minded you could do the job yourself in a day - weekend at the most.
Conversion is always a good laugh, but if you're baulking at $2500 to fix the motor I think you'll find the cost of a conversion a bit steep. There's no point putting a gen3 SOHC motor in - the wiring is different and the DOHC has more torque anyway.

Thanks for suggestions, Unfortunately I wouldnt go calling myself much of a mechanic, I only have a vague idea of parts etc, but have never attempted doing engine swaps or taking apart heads.  I live in SA and dont really know anywhere besides S&J who specialise in the EJ25s.  Id be happy paying someone who knew how to do this kind of work who lived localy.   and yes it is a manual, although clutch does seems really good at the moment. 

Interesting about the DOHC having more torque something I didnt know
So seems like SOHC is out of the question, alot of mucking around for no reason
Ichiban have a DOHC going on ebay for $500, except im hesitant in buying a second motor with unknown kms and service history

for that many km's, i'd source a low km DOHC 2.5 from ichiban
so a full service and slap on new headgaskets too (as the new motor will probably fry it's original ones at 150,000km)
water-pump, all engine seals, timing belt idlers, etc

yes it will cost you a fir bit of cash, but a fresher motor which will give you 100,000km of trouble free motoring.

Robbks wrote:

for that many km's, i'd source a low km DOHC 2.5 from ichiban
so a full service and slap on new headgaskets too (as the new motor will probably fry it's original ones at 150,000km)
water-pump, all engine seals, timing belt idlers, etc

yes it will cost you a fir bit of cash, but a fresher motor which will give you 100,000km of trouble free motoring.