Do you think I got screwed, or is it just part of the hobby?

Have you taken the car to the shop and have them look/listen/drive it personally??? If the shop is in your town, that would've been the first thing I did. Now, I fully expect them to stand behind their work, and I would not put pulling the motor in their hands. They will definetly not stand behind any damage that occurs while pulling the motor. If I was in your position, I would drive it over there, have them listen and look at it and tell them that you will be bringing the shortblock back to them to have it completely gone through at their expense. Tell them you want to be there during disassembly and that you expect that it will be fixed to your satisfaction, again with an extended warranty. If they waffle on any of their responsibility, get ready to involve some legal action, but my gut feeling is that they will stand up to their end of the repair. Did you say that they do multi-millions in business a year??? Should be no problem to stand behind a couple thousand in work to satisfy a customer!!! JMO, Geof