On February 23, 1996, about 1630 central standard time, a Cessna 172N, N6601D, operated by Canelas International Aviation as a Title 14 CFR Part 91 instructional flight, was substantially damaged during a forced landing near Austin, Texas. Visual meteorological conditions prevailed and a flight plan was not filed. The flight instructor and the private pilot rated student were seriously injured. The flight originated from Robert Mueller Municipal Airport, Austin, Texas, about 30 minutes before the accident. The flight instructor reported to the FAA inspector and in the Pilot/Operator Report the following information. The pilot rated student had completed a "normal touch-and-go on runway 36 at Austin Executive Airpark. After turning crosswind and during climb to pattern altitude, the engine started "surging and the entire airplane was violently shaking." The flight instructor took the controls and executed a 180 degree turn to attempt to land downwind on runway 18. The aircraft "overshot" the runway, descended through trees, and came to a stop inverted. Examination of the aircraft wreckage by the FAA inspector revealed the following. Both wing fuel tanks contained only residual fuel; however, there was evidence of fuel leakage. The left wing was separated from the fuselage, the left main landing gear was separated, the nose landing gear was folded under, and the left side of the cabin was crushed inward. One propeller blade had no damage and the other propeller blade exhibited "S" bending. The engine was examined by the NTSB at Air Salvage of Dallas on March 27 and May 2, 1996. The examination revealed that the #3 connecting rod bolts were broken, the bolt boss was broken off, and the cap was bent. The #3 connecting rod bearings were found destroyed. (See the enclosed manufacturer's teardown report) Repeated attempts to obtain a completed Pilot/Operator Report, NTSB Form 6120.1/2, from the private pilot rated student were unsuccessful.