Now that you know a little more about the car, if I were you I'd go back to the dealer and tell him, quite frankly, what the other shop told you. Then, ask him if he's sure the steering box can still be adjusted -- which he can tell from the position of the adjustment screw on top of the box.

Ask him where the oil is coming from, if not from the head gaskets. If necessary, pay him to confirm that it's not coming from the heads by putting dye into the crankcase and using a black light to show you where the leak is coming from.

Ask him to show you the transmission fluid leak at the cooler lines and how he can tell that the transmission needs a torque converter, rather than a complete overhaul. If you're leaking transmission fluid, but the car is shifting Ok, maybe all you need is seals.

With that kind of mileage, I don't doubt that the steering damper, ties rods and pump seal have to be replaced, even if they were replaced before. But those things are relatively simple compared to the other problems.

If the dealer's tech or shop foreman is worth his salt, he'll want to prove to you that he knows a lot more about these cars than the independent he competes with, and that he can even save you money.

Given everything you've said so far, and assuming the dealer can justify his diagnosis, I'd go to a dealership any day. If it turns out that you're problems aren't solved, and you need more work than estimated, I'd bet that the dealership will only charge you for the difference between the work it did and the work it has to do to correct the problems that still exist. But under no circumstance will you end up paying as much as the Indy wanted.

Also, as Mr Raccoon pointed out, having a dealer warranty and perks is always much better than having an Indy warranty, as you can then go over the dealer's head to MB if you're not satisfied.

In any case, good luck, and hopefully the dealer ends up being right.