My 2 recommendations would be to either tear apart your K8 and rebuild it, or swap to a KLDE/KLZE. If you have an automatic, your SOL and stuck with a K8 unless you convert to manual.
First of swap, if you swap in a replacement K8, your taking as much of a risk of a bad motor no matter which one you go with. You want to know it's 100%, you'd have to do a full tear down, no matter which motor. If you put in a used one, you should get a good 100'000kms out of it, depending on how you take care of it of course.
There is a domestic version of the KLZE known as the KLDE. It's 165hp in the 626/Mx-6/Probe and 170hp in the Millenia.
Really, the only difference is that it's of higher compression, has more aggressive cams, better flowing heads (same as the Millenia DE). Technically the ZE also had weaker valvesprings and retainers, which is IMO a non-issue unless you want to rev it beyond 7000rpms, but you can swap in the DE one's if you want.
Those are parts that don't need to be serviced anyway, so getting an imported KLZE isn't an issue. Externally, the K8, KLDE and KLZE are literally identical. Pumps, pulleys, belts, pretty much anything is interchangable. ZE's are so widely available that parts, even internal ones, are not a problem sourcing parts. And comparing K8's to KLs, the K8 was only in the Mx-3, but you can get KL's in 626s, Mx-6s, Probes and Millenias, so there's no shortage of parts. Doing a compression test and a leakdown will give you a good idea on the heath of the motor. Even poping off the valve cover will tell you on how well it was maintained.
Reliability is not that much different sticking with any motor in it's stock configuration. Technically going with a KL it should be more reliable since you don't have to work it as hard to do the same things as in the K8. Same goes for milleage, it should actually be better with a good setup, unless your hard on the gas
For cost, swapping a K8 to a KL. The only thing that's more is getting an upgraded clutch as a proper ECU. The rest is preventative maintenance that should be done while the motor is out regardless what motor you go with.
it smokes pretty bad sometimes. so ive got to do something, i understand any route im going to go isnt going to be cheap, but i cant decide if i should have it rebuit or swap in a new/bigger motor? i have been reading all the posts about the klze motor and called a shop here and they said they could get one and install it for about 3k. i really love the idea and i dont know of anyone on vancouver island that has one like it... im just worried that getting an import engine is going to be problems and more money down the road. like how do i know this motor wont smoke after 20k.. how hard/ expensive are parts? is there a north american version of this motor? 
not a bad deal if u find it with low miles!