I've purchased a number of used engines. A couple from eBay, one from RCU, mostly at local auctions. I wouldn't pay much over 1/2 of the new cost unless the engine is obviously almost new.

I'd also steer clear of MDS engines (M)ultiple (D)ead (S)tick landings is what I've always heard. Stick with OS, YS, Saito, Thunder Tiger, Magnum, K&B (except the older 40's), and the new Evolution 46's are supposed to be great.
Dennis-