You need to find a good indepedent shop. It wouldn't hurt to get two opinions if you don't have a shop that you trust. That dealer seems to be trying to get your car off the road so he can sell another new one. You haven't told us what all is included in the $7,000 but a new head gasket should be under $2,000 even at a dealer. An independent shop is more likely to be $1000 to $1500. If you are not mechanicaly inclined you will probably need to dump the car soon.