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Thanks in advance for your help sorting this out

I have owned this car for 1 year. Current mileage is 157,000. Not long after purchasing, the check oil light illuminated and since then I have been watching the oil level closely. Currently I am adding 1-2 quarts every 1000 miles. No leaks however inside of tailpipe is badly sooted. I do not think I have seen blue smoke at any time. What's going on?

Nearby Saab dealer tested and discovered cylinder 3 at 35% (I don't have the bill here to use correct terminology) Solution: replace engine with 50K used $2500

Not so nearby specialized Saab repair shop tells me valve guide sleeves or seals (I think I understand what he told me) $1200

Who is correct? I have grown to like the car. Body in good shape, cool wheels, new tires and the XM plays for free.

Many thanks!
 
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