iPad 2 loses touch response in particular area of screen

Solution 1:

Take it to the Apple store. They will not only help you be sure it's hardware but explain how they would get you an equivalent device for a known cost with Apple's warranty on the "repaired" iPad part. They might even be able to speculate if the case shows damage that might make a determination if it's more/less likely that you have a wiring or glass/digitizer issue.

Then you can decide if you want to buy a used iPad and try to scavenge parts or buy a new digitizer and roll the dice to guess if it's the screen or the connector or the chipset on the main board that turns the raw signals into a touch event.

Once you know your "official cost to replace" you can decide if you want a DIY project or perhaps pay someone that repairs iPads professionally to offer a repair that might be cheaper than Apple's but have less of a warranty than getting something factory made or factory refurbished.