Yep that’s pretty common. Those 6 and 8 speed GM automatics are complete junk transmissions.

Jack up your truck and spin the wheels by hand while watching the rim edges. If the wheels are bent, your will see it.

Find a different shop and replace the head gasket on your existing engine. It’s not a big deal to replace a head gasket on a Prius engine, the gas engine is just a regular simple 4 cylinder engine.

You do not want a used Japan import engine. The way the auto market works in Japan is that cars are taxed much more heavily as they age, as a way to strongly incentivize people to replace their cars after only a few model years. One side effect of this is that you end up with a lot of cheap used engines from cars that are more than about 5 years old. A bigger issue here though is that nobody maintains their engines, because they only need to last them a couple years. The Japan used import engines often have never had an oil change! Suffice to say, don’t buy one of if those engines, just get a different shop to change your head gasket. You are right when you say that it’s not a big deal to change a head gasket.

Non interference motors are mostly a thing of the past. To get higher compression and better engine efficiency, modern engines are pretty much always interference engines.