Jason, how many miles did you put on your outback before you had HG failure? I have a 98 forester at 180k miles with the same 2.5L engine and I think I'm starting to see signs of the HGs going bad - bubbles in the coolant/thin film of oil on the coolant etc... Any advice as too whether I should get the gaskets replaced or just put in a new/used engine.
I only got 107k on the odo on mine. That was only 16k since my purchase in May 2009. I paid 5K for the car, got $500 knocked off when the motor mounts were suspected as being bad.
Yup...sounds like you got HG failure. Internal failure is the problem with these, so you never see the coolant on the ground.
The problem with HG replacement in Subaru cars is the horizontal cyclinder design means you have to pull the motor to do the repairs. This is why it's so expensive to have a shop do the work. You don't really need a 'new' engine, the overall engine is good (as you see, same engine in Tony's 2008). Even the new 2010/2011's have the same motor. 2012 might have the new FB blocks (completely new motor), but I'm not sure. You might have some shops that will do it for less around your way, labor here on the E.Coast runs $105+ per hour. Make sure a good person/shop does the repairs, as fixing the HG isn't always a sure bet they won't fail again in 20k to 50k more miles. Many have however done the job only once.
I'd say you have two options:
1) fix the head gaskets, and know it's done so you are not stranded while on the chase. Start saving up to replace the car in a year or two with a new car (Subie of 2004+ vintage).
2) sell the car as is, where is, with known gasket failure. Take that money and put toward a similar or newer Subie that has had the HGs done already...and perhaps lower mileage or switch to a Subie with the 2.2 motor (which you trade off MPGs with more reliable HGs).
