She's ugly... but it's reparable. Unfortunately... as you found... if you are paying for someone to do the work... it's probably more expensive than a new block.
Now... "Silver lining" for you... the hard part on the sportjet engine is the crank, since it was a different drive spline than the outboard engine. And, since yours is still good... you can use (more or less) any of the 2.5L Mercury outboard blocks.
With that said... yes, there are some differences with the HP levels... but even if you find a 175... and bolt on the big reed cages... you will make almost the same power. Also... the book says "The front and back of the engine block are matched sets, and you can not interchange them".... well... they are matched sets... but you can swap fronts and backs NORMALLY without an issue. So, all you need is the back side of any of the 2.5L, since you want to retain the 240 intake. SO... you will only need to fix damage to that. (unless you can find a used 240 intake)
I would start with ebay. It seems to be the best place to find used parts.