Sorry if this may sound harsh,

But how could you not notice a cyl with low compression at idle? The idle would be uneven, and it would run like ****. Rear shocks? You didn't notice this? Front end problems, not noticed?

Most of the work you quoted seems pretty over priced.

Sorry for your troubles, but before shelling $5500 out for an old diesel you should

A) Know the car, know what things do/sound like when they are bad, what to look for.

B) Take it for a PPI.

I've bought my fair share of diesels and have never gotten stuck with a lemon, you just have to go over the car with a fine-tooth comb before you hand over the dough. If things arent right (front end, climate control, etc etc) these are all bargaining points.

Finally, I would take it to another shop for an estimate of the damages.