Why did the Engine Blow? Did the Driver continually exceed the Red-line? The Writer never tells us what the actual problem was with the Engine, Japanese Engines normally last for a couple of hundred thousand kilometres, so it would have been helpful to know why such a major problem happened. There are many thousands of XL-7's on the roads with perfectly good engines, so I think the Writer should have been honest about what really caused his Engine to Blow!
I have had my 2001 Suzuki XL-7 for about 2 years now and have experienced only one problem. The emergency break light would not go off when the break was released. Other than that it has performed well and it has only been to the shop 2 times for inspection, both times it needed nothing. I bought this vehicle with 32,000 miles used. It now has close to 50,000 on it and so far I am happy with it. In my opinion the 4wd performs as well as the Explorers and Cherokees that I have owned in the passed. The third row seat is also a nice feature if you have young children and when they are folded down there is plenty of cargo room. I would have no fear in buying another.
Re engine failure: uh... yeah. sorry mate, this is so really really rare that no one really knows what to say except "What the h*** did you do, man?!?!" LoL.
Re exhaust squeak: famous catalytic converter shield noise... did they stick you Ozzies with those d*** converters too?!?!
Re tyres: there was a factory option here in the colonies for 30" wheels... maybe eBay or local or Internet-savvy Suzuki dealer could hook you up... sounds like the ticket for your clearance problem (hope it didn't require significant suspension changes)