Ahhhh "the washer." What serial number is your truck? This was an issue with Machs up until about the 11xxx LSTs (for more info see the "remove the washer" thread at the top of the LST section). Basically that little washer isn't capable of withstanding the stress that it goes through in the engine, and sooner or later it flies apart. Horizon will definetly replace it under warranty.
As far as Machs on ebay... remember, if you're getting it replaced by Horizon, it's a new engine. I don't exactly follow ebay on a daily basis, but if you start the price out lower and let people bid up, I'd expect to get $75-100 for it. It's certainly better than geting nothing for it.
So my question is this: Would you rather by a new engine for $200 or buy a revo for around $470? Seems like it would make more sense to buy a whole truck than just a motor. Is the LST really that much better of a truck to invest in another engine? Without looking at money, would you choose to buy an new engine for the LST or buy a revo?
Well no, I don't really follow that logic. You seem to be complaining about having to spend $150-200 on an engine, but you also seem to be ready to drop $500 on a Revo. Not only are you spending more if you do that, but you're going to lose a whole lot of money on that LST.
I'll just say this. You have an excellent truck sitting there right now. If you feel that you would prefer a Revo, or that you should have gotten a Revo to begin with, it's your money and your choice. Personally, I had to choose between the Revo and LST when I decided to get a MT. I choose the LST, and I'm going to stick with it.