How common are 617 diesels over there, Its alot harder to screw up and engine swap vs an top rebuild. here in canada, you could find a half decent 200 mile motor for about $600 (usually attached to a rust bucket).
A swap is only about a days work.

Since labour should be cheap, id rather pay for a swap than a tear down,

Its pretty clear that the mechanic should have replaced the chain, but since he didn't and the damage is now done, I doubt hes gonna do anything about it.

Good luck.

__________________
1984 Euro 300SDC, (4spd standard)
1986 Toyota Landcruiser Diesel HJ60 5spd X2

Gone but not forgotten (some sold, some stripped)
1983 300 SD, 1985 300 SD, 1983 240D, 1986 300 SDL, 1985 300 SDL, 1983 300 D, 1984 300 D, 1985 300SD, 1987 300 SDL, 1983 300 SD, 1985 300 TD Euro, 1983 380SEC, 1990 300 D, 1987 300D, 1982 300D, 1982 300D, 1994 E420, 1987 300 TD, 1987 300 D, 1984 300 D