Can the 3126 be overhauled?

they are right. it's a throw away motor. there is no liner to be replaced.

 

The 107-7604 Cylinder Sleeve is available for 3126 Engines. Use the cylinder sleeves when it is determined that the existing cylinder wall(s) are not reusable because of wear, pin holes, cracks, or scoring.
Inspect the cylinder block carefully to be sure it is still usable. If sleeves are to be installed, use the procedure given in this Guideline.
If the dimension of a cylinder, or cylinders, is to be accurately measured, For 3126 Engines, use a 142-2285 Stress Plate (3126) or a 125-2064 Cylinder Head Stress Plate (3126).


The 107- 7604 Sleeve is AU$136.23 Genuine but possibly available cheaper aftermarket from someone like IPD?

 

Replace the engine and be done with it.

 

Usually works out cheaper that way

 

you gotta machine the block to sleeve it so its block out anyways, the guys are right, new or reman engine is the go, or maybe a good second handy if you can find one with low miles.