Have you considered shipping it back to Canon for repair? They have a great facility here in California that can fix just about any issue.
As far as Canon vs. Nikon is concerned my opinion in the under $2,000 price category is stick with Canon. Canon, even in your Rebel, uses a CMOS censor that you don't get in a Nikon until you get up to the $1,800 model. If you do decide on a Canon you might consider upgrading to the 50D. It has a metal body (vs the plastic Rebel) and has much higher quality lens standard. I bought a 50D for my daughter this summer and it is an incredible piece of equipment.
BTW if you want a 35mm SLR let me know I have two of them with several lenses sitting on a shelf in the garage.