Yeah, it's definately better to have the motor rebuilt- it's the only way to really know that you're starting with a trouble-free motor. Sometimes, a freshly- rebuilt shortblock or longblock pops up on the for sale section. Now here's what you really should do now.
start the car up, and put a mechanic's stethescope down on the block near the piston areas and listen to see where the sound is really coming from. The easiest access is on the driver's side of course. have someone run the motor up a bit, as well as jab the throttle in short blips- this is an easy way to reveal rod knock.