Cracked heads on my 2002 Dodge Ram?

My 2002 4.7 v8 Dodge Ram was heating up... the radiator had been flushed many times and then we replaced it. Then I noticed the water kept disappearing and it wasnt leaking to the ground so we wondered where it was going. We checked the oil and the water was mixed with oil. Took it to the mechanic who happens to be a cousin and he told me it was a cracked head and the either needed to be replaced rebuilt or i needed a new engine because my truck already had more than 105,000 miles on it. He found this 2005 4.7 V8 Dodge Ram that was going to be junked due to major rear frame damage with 30,000 miles on it for 1800 dollars. So my question is should i replace the engine and basically have a brand new truck (possibly) or would it be better and cheaper to rebuild or replace the heads. And about how much would it cost to replace or rebuild the heads...