Craigslist is lousy with engines. I've been tracking Ford 5.0's for an eventual V-8 swap for my exploder, most are around $500 with complete with wiring harness and computer.
Chev engines should be as easy or easier to get.
I would find a Blazer enthusiast forum and search there, should be plenty of articles on what things should cost, and how to keep from getting bent over.
I mean, knocking and getting hot could be a stuck thermostat also, is there any oil in the coolant or vice versa?
As far as selling it, you could always part it out, which would take longer, make you have to interact with more people, but get more cash out of it than just selling it to the scrap yard. If you have the money to throw at it, might just keep it and start working on it yourself. IMHO it's better to throw $1500 and some time at it, then KNOW your car inside and out and how to fix it again, than throw $3000 at a mechanic to not learn anything, and doing it yourself is a FAR greater value in knowledge gained than $400 bucks from a scrap yard.