Well, you're looking at a chain and guides, plus a at least a cam shaft or towers, several valves (minimum), pulling the heads for the valve work. It all adds up, and $2300 is a pretty fair price for the job.
What caused it?? Well, you are at the 100K mark, that in it self shouldn't be the cause, but 20 years on the plastic chain guides is a lot. The plastic gets brittle with heat and age, when new the guides are white, turning to an amber as they age. Really bad ones will get to a beer bottle brown (if they don't break first). Chances are one of the guides broke under start-up and a chunk of the plastic bound up the chain, breaking it. Once that happened, the valves started beating into the piston tops (or vice versa), and since these are interferance engines, the pistons drove the valves back upward into the cam, likely breaking it or the towers.
'73 280SEL 4.5 (9/72)- RIP
Only 8,173 units built from 5/71 thru 11/72
'02 CLK320 Cabriolet - wifey's mid-life crisis
2012 VW Jetta Sportwagon TDI...at least its a diesel
Non illegitemae carborundum.