1999 Subaru Legacy Rebuilt or Replace the Transmission

Car is not wanting to go into drive, 3, 2 or 1 sometimes. Will eventually engage if I am patient and no issues when driving. Took it to the local dealership and they didn't even look at it. Told me it was a common issue with this year/model that there is a seal in the transmission that is shrinking causing a pressure issue in the lower gears. They told me they could rebuild my tranny for $4000 or replace with a new one for $6000. The mechanic actually told me to just keep driving it and that it wouldn't leave me stranded anywhere and that it would just be worse in cold weather. Spoke with another shop that is willing to put in a used transmission with 58K miles with a 90 day warranty for $1600. Car is in good shape overall and I plan to keep it for a few more years if possible. I am leary of a used transmission. Should I just go with the used or keep getting prices on a rebuild? Thanks so much!