I agree with jace, completely new engine, or go down the rejection route.
I had to reject my first D40, which was quite straight forward as i'd not even had it a week before it had a serious issue.
So the longer you have the vehicle, the more difficult a rejection becomes, although i do know of a case where a guy rejected his truck after almost a year of owning it.
The dealer will tell you they are honouring the warranty by replacing the damaged parts of your engine, but it's your call really.
My first D40, was repaired, and resold very quickly, in fact i see it every few days, and maybe it will now be ok for the rest of it's life?, but once you have a serious engine failure, it can effect lots of components.
I think you at least should ask for a new engine, good luck with it anyway mate, i know how you feel, horrible situation.
Steve
