Subaru Outback overheated. Mechanics say head gasket. Other reasons?

You never mentioned that the thermostat was replaced if it was replaced already bleed air from system like this. Remove cap from overflow tank fill with antifreeze to full mark leave cap off and start vehicle and let idle as engine warms up antifreeze level in overflow tank will rise this is normal once vehicle reaches normal operating temp thermostat will start to open and level in tank will drop add more antifreeze to full mark then put cap back on. That should clear all air from system.

The head gaskets should not have failed after 12k miles but after 3 years there is probably nothing you can do about it. You should consider scrapping the car.

How many miles r on the car?

There are small probabilities that the original head(s) have cracks, weren't sent to a machinist to assure condition and flatness, were shaved too thin, or the head bolts weren't replaced or properly torqued. But since it ran ok for 3 years after the work it's hard to be sure. Before you continue at great expense, check the simple stuff. First note that the Subaru OE t-stats are EXTREMELY reliable and durable, and never fail. If a Subie dealer did the prior HG job they probably tested or replaced the t-stat with an OE one, of course, but it doesn't hurt to pop it out and assure that it's the proper wide-bore OE type. Next, remove and blow out the rear heater hoses, as a blocked one will starve the. cooling system of proper flow as their in-line and not in parallel. There's a chance the radiator is clogged from past use of sealer(s), as well. If it's a copper one then perhaps it's simply not sinking enough heat. Likewise if a cooling fan isn't switching on (check their switches and harness too). Finally, to purge the coolant of air it's best to lift the front of the car upward (or park on an uphill), put a funnel on the radiator hole, and keep adding coolant to it until all air bubbles disappear. If they NEVER fully disappear you may have internal "percolation" from a head gasket internal breach. This catastrophic high-pressure failure occurs less often in the 2000-2009 SOHC 2.5i than the very common HG atmospheric leak (loss of coolant on the left head and/or oil seepage to the outside world from the right head), but it IS possible. You are correct that there's no way I would countenance replacing HGs for $1.6k in a 16 year old Subie. But chase the cheap stuff first. Maybe you'll dodge a bullet. Good luck. Ern