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The 5.3Ls aren't known for having those problems.
First, are they SURE it's a bearing? All you have to do is drop the oil pan (easy) and look for a darkened area on the rod caps, pull those caps, and see if a bearing appears damaged. Be careful just taking their assumption, the 2005 5.3 and 6.0s were known for piston slap that could sound like a rod knock. So be very sure. Listen with a stethescope. Bring it to a GM dealer if you need to.
IF it truly needs repair, consider having the current motor partially rebuilt. At 145K, unless it has seen abuse, there should be very little wear. If it were me, I would pull the motor (4 hour job), pull the crank, pull only the affected rod/piston(s). You can purchase a re-machined crank kit with fitted rod and main bearings for about $200 exchange. Resizing the affected rod(s) runs about $15 a rod. Then you reassemble with new stretch bolts and gaskets and you're good for another 100K miles. There should be no need for a 'full' remanufacture job. Or a crate motor. YMMV.
Or, the 5.3L is part of the LS family that includes 4.8, 5.3, 5.7, 6.0, 6.2, 7.0 and custom configurations up to 8.0L. Both iron and aluminum blocks were used in most. If you're interested in hopping up the power, the possibilities are endless.
You could also trade your Avalanche in as-is. If it is a mild knock, you'll still lose less than spending a ton on repairs then trading afterwards. A 2005 Avalanche is still worth plenty of money.
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