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Well you didn't say which engine you have, but I'd look into doing the 3500 swap. You can get the engine and swap kit for around $700-$800 which is cheaper than a new car. With labor you're probably looking at around $1500 assuming you don't do the work yourself.
Unless the shop somehow screwed up the timing chain I don't see how they could have caused the engine failure just by changing the trans.
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