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i would google "Jaguar Engine Restoration" and call a few of them, you might find one willing to actually pay you for it. they can be re-sleeved you know, meaning that a partial destructive disassembly is not necessarily a death knell. i needed a new block for my engine restoration and found one at Vintage JagWorks. a similar shop may have need of just such a block.
This is not scrap and to destroy it would be sacrilege.
I would strip the sump off first and see what is happening at the bottom end. This will let you see why the distributor is stuck. Then I would disconnect the conrods and main bearings then remove the crankshaft. Having removed the crank take the block to a machine shop with a large hydraulic press and get them to pop the pistons out after giving them a good soak in the Evaporust. If that does not work drill and smash the pistons out of the bores. Normally it is only the piston rings that had rusted and got stuck so with a press they should pop out but you will more than not damage the bores.
Having got the pistons out assess the damage to the bores, have the block re bored to a suitable size, fit new pistons, if need be have a crankshaft regrind and fit new oversized bearings and once it has had a damn good internal clean (oil ways and water ways) put it back in your car. Even if you don't need to use it again the machining work might cost Ł1000 but the block with new pistons, rings and bearings would then be worth around Ł4000.
Shame I am in the UK because I would take it off you.
I agree with Cass
Don't allow the engine to be scrapped for its weight in metal. 3.8 engines are very valuable.
These 3.8 engines have liners which can be changed or re-used if not too bad.
There have been lots of people in this forum who have spent heaps of money chasing down a non-cracked 3.4/3.8 block.
Definitely worth something to someone somewhere.
If you don't want to do it up as Cass suggests then just advertise it.
If it was in Australia I would offer A$1000 which is about US$ 650