As Jock says, overheating that would cause core plug issues will have done so much more damage, that the core plugs become irrelevant.
Is the garage recommending core plugs because that is what they do for every overheat, on any vehicle, or have they identified a specific problem? If a specific problem with a core plug has been found, the engine is almost certainly scrap.
You say a 1.2 Lounge, but not whether this is Panda or 500. Used engines are plentiful, but there are some detail differences that need the correct choice.
Panda (169) Lounge originally had a 1.2 60hp Euro3 (square oil cap), then changed to a Euro 4 (round oil cap and cam sensor), then the very last ones went to the 70hp with variable valve timing(I think these were Euro5, but the change to Euro 5 might not coincide exactly). I think that is when the cam sensor disappeared again, but not certain of this. This was the same engine spec as early 500s.
In later Pandas, and 500s the engine went to Euro 6. It is important to replace with the same spec engine, or the engine computer will not fuel it correctly.
Replacing the engine will cost a little more in labour than replacing the core plugs, as the ancillaries take more time to swap over than replacing the core plugs, plus of course the cost of the replacement engine. But that option brings the promise of reliability, trying to repair the overheated engine brings fear of further failures.