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Cracked Brick Chimney

We suffered a heavy rainstorm here in Indianapolis a couple weeks back and found water dripping into our fireplace with a large bricked in insert. We have a cap on the flue. Since we were done with the winter burning, we needed swept anyway so we had a sweep come out. He inspected the stack and located a crack that runs almost from the cap to the firebox. He stated that this was most likely where the large amounts of rain was coming in. Once he proceeded to sweep, a large piece of rusted steel came out. He said it was a piece from the insert and was sitting near the damper. It looked like it had been rusting for years.

Long story short - due to the deteriorating insert, we can no longer burn inside the box and the stack needs rebuilt. We talked about options, none of which were inexpensive. I think we will end up going over to a natural gas insert but still will need to address the leak in the masonry. I have been thinking of the following options and would be interested in thoughts on pros and cons.

1) Have chimney rebuilt as is and add a new insert in order to burn again (fairly expensive)
2) Have chimney removed and rebuilt only for a direct vent insert. Frame around the direct vent stack to create the chimney and veneer with similar brick
3) I don't know if this is possible, but have the masons skim coat the existing brick and veneer. Add direct vent gas insert and stack inside existing flue.


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