So in any sort of discussion like this, the guy with the biggest stack of paperwork usually wins. Given the tidbit from Bjowett on the recall for faulty springs, some research into that, you need to assume the role of trial attorney and get your stack of paperwork together. Photocopies of every receipt for maintenance that was performed on the vehicle, combined with all the information about Toyota valve spring recalls, should be gathered up and presented to the Toyota factory service rep for your area. Then a serious discussion could be had with them. There is a smoking gun there, maybe related, maybe not, to your failure. At least there is the appearance of a smoking gun. That, along with proof that the vehicle has been maintained per Toyota's recommendations, could get you across the goal line.
Also, it would help to have a list of what you want (a factory engine replacement, installed by the dealer, with a full warranty) and what you would settle for. Ask for the first and see where it might take you. They've already offered up $1000, so there is some room there for more, I am guessing.
Also, it would help to have a list of what you want (a factory engine replacement, installed by the dealer, with a full warranty) and what you would settle for. Ask for the first and see where it might take you. They've already offered up $1000, so there is some room there for more, I am guessing.