I guess I am picking up the mower tomorrow without any repairs being completed by the dealer.
I got a call from them this morning and he went over a list that the Technician gave him. $1250!!!!!!!!!!
This was what he stated was the "worst case scenario." The job would include a new camshaft, new cylinder head and lifter and all labor to tear down and rebuild.
I am sorry but I think that this guy is CRAZY. I did ask what the bare minimum it would cost to do just the valves, lifters and rods and the labor alone was over $400 based on the service manual. Also, he stated that the Technician wouldn't necessarily be willing to put in new valves if for some reason they would't "seat" properly in the head.
So, I decided that I would just pay them for the half hour of labor they have into "diagnosing" it and I will just tear the top end down myself. I am quite certain that if the rods are valves are in good condition, then I will just swap out the lifters with new ones, put a new head gasket one and put it back together. I will tie up a few hours of my time and maybe $100 of parts including an oil change and hopefully it will fix my problem. At this point I just cannot justify spending any more than $500 on it no matter what guarantees I get, but with the engine being 22 years old, nothing short of a complete overhaul will really provide any guarantee.
With the long weekend ahead, I hope to at least have it torn down by Monday so that I can get a list of parts together to order next week.
I will report back with pictures once I get the head off.