First of all, I completely agree with your assessment of used nitro engines for sale -- they are generally beaten half to death and then sold as "lightly used". Used-engine salesmen are bigger liars than used-car salesmen. I've bought a few used engines over the years and only one of them was actually "lightly used". Most of them were significantly worn, and several of them were so badly worn they were damaging themselves. I remember one Losi 3.4 engine I bought that had bearings so badly worn the crankshaft was wobbling and scraping against the inside of the crankcase. I wonder if someone leaned-out the fuel mixture and intentionally ran the engine at full throttle until it ground-off enough chrome bits from the sleeve that they got into the bearings and destroyed the bearing races in a matter of seconds. I can't imagine any other way the engine could've actually been running under its own power for long enough to damage itself that badly. Then, to add insult to injury, the seller disputed my claim on the grounds that I had damaged the engine by opening the backplate to see why the crankshaft was wobbling. Fortunately eBay sided with me; if I'd bought the engine anywhere else I would've been screwed out of my money.

- - -

Having said that, replacing pistons, sleeves, conrods, wrist pins, retaining clips, crankshafts, and rubber seals is easy work that requires no skill or special tools. Rebuilding a carburetor requires attention to detail (specifically noticing tiny bits of debris that might interfere with the fuel feed and cause infuriating tuning problems), but again no skill or special tools. Replacing bearings requires a small toaster-oven to heat the crankcase to about 300°F, but again it requires no skill. The only part of rebuilding a nitro engine that requires skill and special tools is re-pinching old sleeves, but that isn't worth the money unless the sleeve is significantly modified (or severely overpriced from the manufacturer to increase the buyer's perception of value).

Nitro engines are easy to rebuild, because their designs have been refined for optimal use by hobbyists for about 70 years now. Unless someone has an exceptionally expensive engine, possibly with modified parts that would cost a lot of money to replace, it isn't worthwhile to send the engine to someone else for rebuilding.

If your friend wants to get anywhere at all with his fledgling business, I'd suggest learning to repair small appliance gasoline engines instead. Conveniently, 1:5-scale RC engines are functionally identical to small appliance gasoline engines.