I don’t know how many other (street) vehicles flu has but if the car was in good shape otherwise, if it were me, I’d make sure it passed smog. He can’t sell it to anyone but a wrecking yard if it doesn’t. If that means replacing the head gasket, so be it. He can get it done for $1100 to $1200 (incl machining, if necessary) by numerous backyard and private mechanics in the county vs $1800 – $2000 at a shop.
And it doesn’t matter what it’s current “book value” is. Flu claims $1500 but if it looks good (no body damage or big upholstery rips) runs good and tests out fine by a savvy private party (or their mechanic), it could easily have a “market value” of $2500 to $4500. There is a BIG MARKET for decent-running older vehicles, not only in CA but the entire country! This is so because the alternative is to buy a later-model vehicle with NAV and parking assist, iphone hookup, blah, blah, etc which jacks up the resale value exponentially. A large segment of the used-vehicle-buying population could care less about all that junk.