By 'head gasket' I assume you mean water jacket gasket? (The big rubber thing that goes all the way round between cylinder head and rest of engine...)
Anyway, our 1.9DG did that last year too.... Kept topping up the coolant and it was OK for 6 months or so.. Then it got worse and wouldn't keep any coolant in at all!
We had all the same tales of doom and gloom, busted cylinder head studs and needing a new engine so we prepared ourselves for the worst. After looking at our options, I was going to go for a Vege engine.
I say was, because I took it to that nice Mr. Baxter and we decided to give changing the gasket a go. His magic fingers did the trick. Old gasket off, new one on and no busted cylinder head studs to worry about.
So, in my experience, if you're happy with the way your engine runs and are prepared to risk it - it can sometimes be done. It wasn't a dirt cheap repair (quite a bit of labour involved) but it was a hell of a lot cheaper than a new engine. 12 months on and still going strong...
In summary:
1. Start saving.
2. If it's just a small drip, keep your eye on it and keep topping up.
3. Have a go at changing the gasket. (but don't waste money if the rest of the engine is on its last legs!)
4a. Rejoice
or
4b. Get new engine, and curse at wasting money trying 3 above!
Good luck
