Driving one night and engine just starting idling like crap and also blue smoke from exhaust, from my experience this sounds like piston rings are burned out and buring oil... Sugestions please! Should i move on to a different engine or get it rebuilt?

Piston rings will not suddenly wear out as in overnight, but they do it over a long time.  It sounds like you either have a bad head gasket, vacuum leak, or some dirt plugging up the carb/injection ports.

As far as replacement, the 1.3 is a tough little engine and is economical to operate.  If you don't drive over 60mph or it rarely sees the highway, I would stick with it.

ok... i wasnt for sure, it just drives us around the deer lease but it really sounds horrible, like its not firing on all 4 cylinders 

what would you suggest doing to at least maybe correct it or slow its wear process?

Start with sorting out the ignition and fuel issues to get it running right. 

I have a strictly offroad beater that has a somewhat worn out engine too.  The stock carb was giving me all kinds of fits and after spending too many hour fiddling with it, I went with a Weber.  Ran much, much better after that. 

For the oil burning issue, I've had some really good results from Restore engine treatment.  I also run 20w-50 in the rig.  It's no longer a mosquitto fogger.

ok... thanks for the help. i was already planning on rinning heavier oil to help but i dont believe this is a carb issue, i really think it is a serious issue internally... i wish i was at my deer lease to work on her a lil bit.