I would not be so quick to give up on the head either.

I would try another machine shop. They can be drilled out successfully especially if the machine shop has the right equipment. It's a little dicey doing it with a hand drill but with a drill press it ought to be a piece of cake.

I would have them check the condition of the valve train, it would be worthwhile to have the valves redone while you have the head off.

__________________
The OM 642/722.9 powered family
Still going strong
2014 ML350 Bluetec (wife's DD)
2013 E350 Bluetec (my DD)

both my kids cars went to junkyard in 2023
2008 ML320 CDI (Older son’s DD) fatal transmission failure, water soaked/fried rear SAM, numerous other issues, just too far gone to save (165k miles)
2008 E320 Bluetec (Younger son's DD) injector failed open and diluted oil with diesel, spun main bearings (240k miles)

1998 E300DT sold to TimFreeh
1987 300TD sold to vstech