I would say the first thing you need to determine, was the hole caused by rot or was this a stray glob of sand during the casting process that caused a single thin spot.
If the head is generically rotted in the water passages then it isn't worth messing with.
If it is a localized thin spot it could be pinned or welded. Welding might be a better repair but a lot of shops won't surface the head after welding. The hard spots can destroy an expensive cutter.
A pin repair might fix it and the cast iron pins are easily machined.
Worst case you can re-use the valves, springs ect. ECZ-C heads are not terribly valuable.
Maybe the shop would work with you on the cost of seat and guide work.
I wouldn't say the hole is their fault, we generally surface the heads after the seat and guide work so the deck doesn't get scratched. It has been said the shop should have noticed the hole but the installer didn't see it either.
http://ford-y-block.com 20 miles east of San Diego, 20 miles north of Mexico
