I did some "searching" on your dilemma today, and here are my thoughts.
I'd convert to Electric, but the only "kit" I found is "notify me", and unless you have your own machine shop, hard to do the Diff Spur gear and motor mounts.
Best to find another Losi 3.4, but again, unobtanium. You can adapt a Traxxas 3.3, but it will be underwhelming.
I read that the "mid frame" Losi 3.4 is close enough to all of the common 1/8 scale .21/.28 ci "big block" engines that you can enlarge the (engine) mount holes to adapt to your mid-frame threaded mount.
I'd get a basic OS .21 (or engine of your choice) and some needle files.