Which one is better?

On the rebuilt, lets assume that it was built by one of the experienced drive builders. Lets also assume the price for a rebuilt is slightly less or equal to the new price.

We know that the Merc. upper gear sets are the weak link. After a catastrophic gear failure occurs does the gear case stretch? If it does, a used case would have larger tolerances and possibly stretch more that a new case. Imco and Bmax use thicker cases to keep the case from stretching and the gears moving around. Not wanting to get this thread debating the IMCO vs. Bmax etc. lets just keep it to brand new Merc. XR upper vs. Rebuilt Merc XR upper.

What are your thoughts?

Depends on who does the rebuilding. The integrity of the top cap on the port drive can determine how long it lasts due to the fact that when in forward, it is pushing up on that cap.

If it was a catastrophic gear failure, as in spit off teeth and passed through the gears, the case would almost certainly be destroyed beyond repair.

Now in a normal case where new gears are installed, I woudl say that a rebuilt one done by a quality shop would last longer than a new upper straight from Merc based mainly on the level of quality control that a small shop can have over Merc. Better clearances in the setup process will have a major impact on gear life.

Even my Imco upper gear clearances were about 50% larger than they really should have been pre rebuild.

The case would have to measured to see if it was hurt during the destruction of the gears. In the case of the XR, the pinion gear will sometimes exit the case breaking off at the thin spot were the retainer nut is. Then the case is done.
If things stay internal, then tower alignment and floor flatness will tell if the case it beyond repair. So if the case it qualified and properly setup, that might be the way to go.
I have seen some severe damage inside and the case was reusable, after repair.
Hope that helps.
Dick

Even if you measure the case and it is rebuildable, wouldn't it be a little weaker from all the metal stress from the grinding teeth? Kind of like a car that has been in a bad accident, you can rebuild it to run and look great, but is it as strong as it was new? I am just thinking that an old case has to be a little stressed out in critical areas, and possibly break before a new one. No real proof here just thinking outloud.

I suppose you are right in your thinking, but I have put several back together and they have lived a decent life after crunching some serious gear teeth. Nothing is quite like new, but then a seasoned block is better than new. A few heat cycles on a drive helps it find it's home. If they measure up ok, ,then I dont have a problem putting them back together. If they are out of wack, some times they can be brought back into line. Which is better.. Well I would choose new, but some don't like that option. Just my .02..

Dick