I’ve been driving XTs since 1993 and have owned a couple dozen ER27s as daily drivers and worked on others. 250,000 mile engines, and more, if well taken care of.
The blocks and heads are non issues. Though splitting and assembling one yourself is not ideal.
Those heads (and other old generation Subaru heads) get superficial, benign cracks between the valve seats. very well known amongst old school Subaru folks but not anyone else. Ignore them and carry on, but they’ll freak you or a shop out if they’re not familiar with old school subarus. High mileage ones can get warn HLA seats.
headgaskets no big deal. I don’t know if headgaskets are still available OEM but those would be best.
Oil pumps don’t “fail” but can often cause incessant ticking by introducing air into the oil. (It’s often called TOD or Tick is Death, although it’s a misnomer since it doesn’t cause any problems). Engine runs fine and it’s benign but engine sounds like a diesel. Oil pumps are NLA and one of the most common needs that would be nice to have available.
New OEM timing belts, pulleys and tensioners are good for the factory recommended 60k change interval. Some of those pulleys are no longer available and old pulleys are devoid of grease and will seize and break the belt if not addressed. how you address those timing pulleys and if you use nonOEM parts will dictate change interval. I regrease the bearings, use after market timing belts, and check the belt and bearings around 30k.
The passenger side belt had an adjustment routine that’s suggested to do at routine intervals and there’s an access point through the belt cover for that process.
A well maintained OEM water pump is good for the 60k timing belt interval. But you may not get OEM and the long shafts and general design lend themselves to replacing with every timing belt change. They don’t have any ominous or outlandish failure modes, just wear and age.
Electrical issues - these are only an issue now with age and brittle/corroded connectors.
The CTS wiring is so common I have no idea how many of those I’ve fixed and I’ve done them Preventatively before. There’s an injector harness thats the same and can be bought new and sometimes the wire a few inches back needs replaced. Very easy, you would just address it as soon as you were building the engine.
Plastic alternator connector - same thing. Brittle, but they’re obvious and easy to diagnose because you’ll loose charging. There’s a new connector available, easy and you’ll do this from the beginning unless you get a rare perfect connector.
IAC - idle control sticks very commonly. Clean them out liberally internally, preferably while activating the valve so it’s cleaning through the whole range of motion and getting all parts. They can also fail and need replaced.
knock sensors don’t fail often during nominal use but are so fragile with age they can break during removal or work.
convert to an EJ alternator so you have more modern availability.
that’s it - lots of parts are NLA and not a huge supply and it’s only going to get worse.
Why not use an EJ22 engine?