Anyone remember the Tooth & Nail debacle at Arfcom?
Debacle Link
Executive Summary: T&N milled some slides and fucked them up. They doubled down on stupid and now Tooth & Nail is a joke on Arf.
Contrast that to what's happened here. This shop owned up to their mistake and appears to have gone above & beyond to make it right. Yes, they're eating the cost of the parts and labor, but they just created an ambassador to sing their praises. How much work will they get because the OP is posting good things about them? The other benefit to the shop is that it puts the nonsense behind them. The shop may have simply did some quick calculating "It'll cost us $X if we placate him and at least $X+Y to battle with this guy while having our name dragged through the mud on the Hide."
I work with too many clients that cling to drama that costs them money. "But it's the principle of the whole thing!" Fuck that. The principle is to make money, not to always be right.