Joe, I am in the middle of a similar issue with my 89 Si. Based on what you say I think the odds are that you have a head gasket problem, with compression leaking between cylinder 2 and 3. It could also be bad valves, or bad piston rings in both those cylinders, but I think the odds are that it is the head gasket. Assuming it is either valves or head gasket you do not need to remove/replace the entire motor but rather just pull the head off the block. Not an easy task but a doable one, even without a garage. The Haynes manual has decent instructions, but the best is the factory service (downloadable at
manuals.php ). I just removed the head off my 2.0 si - it took about 3 hours and required no special tools, only a very flexible hand to remove the two middle underside intake manifold bolts. I am now having my head rebuilt (some bent valves) for $200 at a local machine shop and getting a complete head gasket kit for $80 (watch out for cheap ebay kits for $40!!). Throw in a timing belt kit and you are good to go for a lot of miles for $500 and lessons learned. The fact that yours is/may be is a 2.1 does not matter for the job itself - but perhaps for the head gasket kit - I don't know if that is the same or not. Given the relatively low miles on the car I would not naturally assume the engine needs replacing. Hope that helps.