LAME's might not be the experts on engine life, however, they sign the MR and may end up in the big house if they don't follow the recommendations.
The best thing you can do is build a strong relationship with your facility and get their opinion on "on condition" engines (early in the engines life, not 20 hours TBO). If you don't like their opinion, feel free to get another opinion. Once you have built a good relationship, stick with the one shop if you can help it.
I've seen O-320's that have done WELL over 4000hrs, I'm under no illusions that they can go the distance, and based on that, I would have no qualms signing out an "on condition" engine if I:
- knew the history of the engine
- knew the operator
- knew that the operator understood what liability I was undertaking while trying to save him some money.
At the end of the day, I believe that getting an engine "on condition" is a privilege, not a right.