I'd say that if this quote is without seeing the motor, then they are covering their *ss on every possible thing that could be wrong. And from the looks of the items the only thing that is going to be left of the original motor is the case...
Got to admit that the hourly rate is a beauty, is that normal? If so then the next time a client complains about my rates I;m going to tell them, 'Hey, just be glad I'm not your mechanic'