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rebuilding 02 head

Hi,
I posted this request for info to the list before but didn't get any
response which made me wonder if I screwed it up so I'm trying again
(please accept my apologies in advance if it did go through and no one
answered.).

I have a 76 02 with 138k that is smoking but not using much oil.  Since
the head has nver been touched and I was told by one mechanic that he
thought it was the valve guides I thought I would take this opportunity 
to have the head redone.  When I called one mechanic who specializes in
BMWs I was quoted a price of $500 for a stock rebuild if I brought the the
head to him (i.e. I remove and install it).  This seems very steep to me. 
Is this a reasonable price?  How much should a rebuild run (we're talking
a car only driven in the summer that will never get near a race track)?

Any help here would be greatly appreciated.  I love the car but my SO is
not so keen on it especially when you talk big bucks for repairs.

Jay T.