I think the more likely scenario is probably cost effectiveness; i.e. spending a great deal to rebuild a boiler which likely has future problems vs. building a new boiler.
May I quote from their website:
"In 2008, we contracted with a very experienced and respected locomotive boiler inspector to examine 2353’s boiler. He told us that yes, we could repair the cracked area, but because there already were a number of other patches in the firebox, we could expect further cracking in a relatively short time. Other information we have indicates that the lifetime of the firebox on an oil-burning locomotive is about 12 years. The present firebox was installed by Southern Pacific in 1942, and the locomotive was operated by them until 1956. These facts convinced us that an entire new firebox was needed.
However, the boiler inspector pointed out that it would be extremely difficult, if not impossible to replace the firebox. Having originally been built in 1912, to an old design, the firebox is keyhole-shaped, and of the crown-bar type. The capabilities of present manufacturing facilities to produce the compound curves and flanges necessary to rivet a new firebox to the remainder of the boiler are quite limited. If the job could be done, it would probably cost more than an entire new boiler. And, we’d still have half of our boiler being about 100 years old. His recommendation was to have an entire new boiler built. This would be a modern welded boiler, with a radial-stayed firebox, but would be of the same outside dimensions as the present boiler. BUT, this would cost about $500,000."
In addition, the museum was previously connected to the outside world via the San Diego & Arizona Eastern Railway, which allowed the museum to rent out the locomotive for movies, etc., increasing revenue. This connection was broken when operation over the line through the Carrizo Gorge ceased sometime in the mid 2000s.
This lack of usability elsewhere means that it may not be a great idea financially to operate this locomotive on their (not that limited, but limited) track. The “saddle tank” mentioned is a 2-8-2T logging locomotive with extremely small wheels; significantly more powerful at the speeds they operate at, and likely better suited for their grades.
In the absence of direct proof otherwise, I’m going to assume that they know what they’re doing. I don’t know their financial situation, but I do know that steam costs a lot of money for any museum these days; even Steamtown doesn’t currently have a steam locomotive operational with (albeit limited) government funding, which is significantly more than that of almost any independent museum.
Anyway, back on topic: they state that the boiler is repairable, but isn’t worth it.