Well there is a guy who dropped a V8 engine into a series 1 S-type. So anything is possible.

Main thing you would probably need to watch is the ECM. Might well be some wiring loom differences.

You are going to need a new hood at a minimum for the additional air vents.

I would not fix your current car as the cost will be high and you will still have a wrecked title.

There are XK8s with blown engines, I would bet there are XKRs as well.

 

Update for anyone interested--I recently picked up a new XKR (2000, British racing green) and have decided to part the wrecked red one. Thanks for all your input and help.

 

Looking at your avatar, car looks great! Good job on stickin with the R, now...be safer with this one, ok?