Lets grow the sport
I would say that its not worth building a diesel with any of the smaller engines. It won’t be competitive in the LPSD class no matter what you do to it. The other factor is the cost of building a 662 or 722 for instance is about the same as building an 1105. I know this from experience my first build was a 662 and although I learnt a lot from the build I was never happy with it.
Right now the Kubota D1105 is still top dog in the LPSD class.
Finding one can be a challenge and you can expect to pay 1000 – 1500.The older Kubota engines like D950 are also a good choice and can be had for $300 to $1000 bucks.
The 950 has a superior injection pump over the 1105 but the head does not breath as well and needs lots of porting.
Also you are of course missing some size there too.
Don’t worry too much about the hours on these engines. Its not uncommon to find them running good with 3500 to 4000 hours on them. Places to look would be refer units in trucking also golf course mowing equipment mostly Toro units.
Check in with golf course mechanics sometimes they have units scraped for parts with good running engines.
Mitsubishi K3D 59 CI
Perkins 103-10 61 CI
Caterpillar 1.1 61 CI