New here...
I recently bought a '88 All-Trac wagon with much enthusiasm for the snow, only to find (after weeks behind the wheel) that the transmission really needs some love. The synchromesh gears between 1st, 2nd, and 3rd are quite worn - lots of crunching when downshifting. My local transmission mechanic quoted the repair around $2000 - hundreds more than I bought the car for!!! The rest of the vehicle is fantastic, and will clearly (hopefully!!) serve me well for many more years of driving. Any advice? Should I save up and go for the rebuild? Shop for a new transmission/transfer case entirely? Sell the car and buy some expensive scotch?

You have to ask yourself if you want to spend the money.. Having synchros go isn't going to leave you stranded or anything.. it will just crunch a bit. However it might be worth it if you prefer to keep your car in top shape.

You could also learn to double clutch when downshifting.. I learned this on my older Hondas which always had synchro problems and its become a habit.

Just out of curiousity, have you tried changing the transmission oil? I'm definitely not saying your mechanics diagnosis is wrong, but fresh oil never hurts and may help quiet things down.

And above all, DON'T SELL THE CAR!!! All-Tracs rock and you will regret it!!

My '89 has 217,000 miles on it and it's syncros are technically "shot" as well. It shifts well when warm, but you really have to treat it gently when the transmission is cold. As long as the bearings in the transmission are quiet and there are no other issues like the transmission jumping out of gear, I would just live with it.

A gear oil change is good advice. You could even try experimenting with different brands / weights of gear oil to see if it improves things. Do you have any experience rebuilding manual transmissions? These units aren't hard to work on. Parts are very expensive, though and you may find that some parts are "dealer only" parts.

Don't sell the car because of this. Just because something doesn't work as good as new doesn't mean it can't be lived with for years. Be careful with aggressive downshifting. This is the hardest thing on worn syncro hubs and sleeves.

Thanks for all of the good feedback! I will definitely be hanging on to this car; just this weekend I showed up a pickup on a loose country road (!!!), and wouldn't trade that for anything. I am very gentle with the transmission, and it does work well aside from it's crunching. I will go for an trans oil change - I figure that it can't hurt anything.

I've never dropped/opened a manual transmission, but what's more fun and intriguing than a box full of gears, eh?! I've called up Toyota, and they are sending me a shop manual. So glad that there is a forum for All-Trac goings-ons...

I will work on double-clutching and rev-matching - I haven't had much luck with that, but then again, I have no tachometer. Excuses, excuses...

I never use my tacho to double clutch.  Practice heel toeing with it as well so you can double clutch while braking.

I would try running auto transmission fluid, will probably make your crunching a lot better.  Not really interested in the discussion that this will lead onto about the oil not being perfect for your gearbag.

Quoted from ajmcafee

New here...
I recently bought a '88 All-Trac wagon with much enthusiasm for the snow, only to find (after weeks behind the wheel) that the transmission really needs some love. The synchromesh gears between 1st, 2nd, and 3rd are quite worn - lots of crunching when downshifting. My local transmission mechanic quoted the repair around $2000 - hundreds more than I bought the car for!!! The rest of the vehicle is fantastic, and will clearly (hopefully!!) serve me well for many more years of driving. Any advice? Should I save up and go for the rebuild? Shop for a new transmission/transfer case entirely? Sell the car and buy some expensive scotch?

Is your car automatic or manual?  
You may want to try junkyards for spare parts.  I know that All-Tracs are rare, but I do come across them once in a great while in junkyards.  For a junkyard search try http://www.car-parts.com.  Select Corolla and the part you want, then if that part has a 4WD version, another dialog box will open up asking you to specify whether you want 2WD or 4WD.  I don't think you should spend $2000 on replacing the synchros, especially when most of that $2000 is for labor: it takes a lot of time to remove, open up, and re-install transmission parts.