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UPDATE:
Got a call today from the dealership. Said the motor is done for. Said that in order to properly diagnose what happend they needed to take the block apart. They would send pictures to toyota and if they choose to cover it I wouldn't pay a dime BUT.. if they say they won't cover it I'd have to pay $3,100 to take the block apart diagnose and put the block back together.
I asked him for his honest opinion if he thought that they would cover it. His reply was "I've seen them Cover worse" so I gave the okay. I'll get a call tomorrow with the results.
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