What color was the coolant that came out of it? Any chance there is a Firestone oil change sticker in it, or a service history there. I do several different types of vehicle inspections, including warranty inspections and liability inspections for Walmart and Firestone. I have seen Firestones universal coolant gel up and not play nice with several types of Oem coolant. I drive a ton, and have been driving and servicing high mileage Toyotas for the last 10 years. I have never seen Toyota coolant do that, even when it’s old. I have never used head gasket sealer in mine, and don’t think I’ve ever worked on a Toyota with it. I do know several models of pruis are know for head gasket issues though, so it is something to consider

Yes, you can. However it’s a mess, a pain in the ass, and your probably better off just putting a cheap cv axle from rock auto or even a used one in instead.

I do warranty inspections, and have look at more 1.4 liter motors with cracked pistons than I can remember. As soon as I saw the title of your post I knew it was a cracked piston. A new engine will fix the issue. It’s an extremely common problem, and I would not recommend a used motor. If it’s worth it depends on the condition of the car. Do you owe money on it? Is it rusty, dented, ect. Have you kept up on other maintenance, brakes, suspension, tires ect? I haven’t seen too many transmission issues with these. I know $4,500 is a lot of money but it doesn’t buy you a whole lot for a vehicle anymore.