I think it is best to defer to the engineers on this one. Submarines are very finely tuned boats, and a relatively small accident or fire might very well “total” them.
It’s not just that they need to operate, but operate silently. Anything that happens to the hull could make them stand out like a sore thumb underwater.
This being said, it might be time to rethink the submarine, not doing with less, but adding new designs with new capabilities.
One idea is to create the equivalent of a drone submarine carrier. A large, slow moving submarine that carries several shorter range drones, acting as their “motherboat”, as it were. As such, it and its drones could patrol an enormous amount of ocean or coastline.
Drones could be like long range torpedoes, carry several torpedoes, or they could be recoverable, providing long range reconnaissance, tracking other submarines, etc.
I'm not terribly worried about silent operations - that's mostly a propulsion space issue. Engineers can test the metal for fatigue, replace all the electronics and damaged cabling, replace probably all shock mounts that were exposed to high temperatures, and otherwise determine the necessary repairs. It comes down to whether fixing the boat is the best use of our tax dollars. Will more of that $1B go to Obama's supporters if we use it to repair this warship or if we use it for the next Cash-for-Clunkers or green energy stimulus. Isn't that how all federal spending decisions are made these days?