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Well it would really depend on the condition of your engine. It would take more labor to repair your engine than it would to just replace it. But unless the engine is very damaged it should be cheaper to have your engine fixed. And replacing the head gasket and having the head repaired should be under the price you were given. A head gasket set for a 4 cyl engine is around $100 wholesale. I would call around and check with other shops next.
If you can get your Hands on a ENGINE COMPRESSION TESTER (they sell them at Harbor Freight), you are going to find out that you blew the Head Gasket and your Compression is Low.... Probably 2 are down below 120 (Closer to 50)
Nissan is announcing a voluntary service campaign and offering to
replace the passenger air bag on 1994 and early 1995 Altimas. Nissan is
offering the new passenger air bag to maintain a high level of customer
satisfaction and assure consumer confidence in their Altima.
IDENTIFICATION NUMBER
Nissan has assigned identification number P3115 to this campaign.
This number must appear on all communications and documentation of any
nature dealing with this campaign.
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