Fix it.. taurus' are good cars, if you take good care of em theyyl lastyoua lifetime..

If you can get it fixed for $1200-$1500 – that's a REAL fair price for a transaxle overhaul. If the rest of the vehicle is in decent shape – I'd go for it.
As far as the heater, I seriously doubt that the tube is clogged – get it properly diagnosed and repaired as well.