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OP you are doing this the right way. Meet with the GM and give him a chance to make it right. If not then consider legal repercussions. I personally don't think a new engine with an extended warranty thrown in is asking too much. A replaced engine will show up on Carfax and it could be viewed as a negative in the future when you go to sell the car.
Clearly this is taking up a lot of time for you as well as stress it has caused for something that should have never have happened.
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