Not Ranked
Maybe I missed something here but I can understand why KC is getting a little bent.
If this happened to me, I would be mad as hell too. However, after communicating with the builder, I would simply pull the engine and ship it back to KC and let him honor his warranty (as he has stated he would do). Obviously Damage has the financial resources to do just that.
If I bought a Ford crate engine and it imploded during the warranty period, they would probably ask me to crate it up and send it back to them for analysis and repair.
If you send it back to KC and he fixes it, you will get a new engine with a new warranty on it. If he just sends you the parts and you or someone else rebuilds it and then it grenades again, who's going to honor the warranty. It won't be KC.
I feel for both parties. No winner here. Is there a reason Damage doesn't want to send the engine back? Did I miss something? Won't be the first time.
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Jim
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