Depends on who is going to do the work and what time frame you are looking at. I just went through the same thing: cracked heads, water in the oil.
I didn't drive it once I found what the problem was, as you can ruin the cam bearings and cam. Anyhow once I had the heads off, decided "hell, I am this far, might as well pull the bottom end and rebuild the whole thing while I have it out. Than I know I have a "new" engine in place and should be good-to-go for many more miles. All-in-all, for the machine work, heads, gaskets, headbolts and fluids I ended putting about $1200 into the engine. I did all the wrench turning myself, so there was several hours of labor, a bit of loss skin and the joy of getting personal with my truck.
Knowing all of this, there is one option you didn't mention and I have seen it posted in other posts: Swap out the 2.9 for a 4.0. The cost may be about the same and you end up with a few more horse power. I might have done that, but by the time I thought about it all the machine worked had been done to the engine. I couldn't afford to switch canoes in midstream.
Good luck