I agree that it was pretty stupid to do this because of the safety issues. The rotor housings are fairly strong, but could blow apart under high stress like that one was subjected to. As for the rotary engine, there is very little success with a rebuild. The entire rotor housing usually needs to be replaced, since the tolerences are very specific. It's fairly easy to detect a blown apex seal externally with a compression test. Rotary engines need a special compression tester unless you make your own.
As for replacements, RX-7s are like Legos. Most of the engines/trannys are totally interchangable with the proper ECU and wiring harnesses. A new motor will run between $2000-10,000 depending how you want it built. A decent remanufactured rotary for their application would run about $3000-4000. Usually a donor car works better if you want to be cost effective.
My 13B street port that I had in my '82 ran about $5000. And when the apex seal went up in my '91 I sold it.
