First things first: I assume by mils they mean thousandths of an inch (pet peeve; no machinist measures in mils). So exactly how do they know how much was taken off? There is no machined reference flat on the top of the head to use to identify the original thickness.
Second: how far out of flat is the head? If it's not warped out of spec, why cut it?
FWIW, I've had a machinist I trust tell me that the 1FZ-FE heads were listed at a maximum material removal so that Toyota wouldn't be responsible for undermining the EPA restrictions on exhaust gas volume per cycle. This necessarily happens when you remove material form the underside of the head, because the valve openings are conical and not cylindrical. All that's required is to move the valve up, or cut the top off, whichever is appropriate for the amount of material removed, and to match the cams.
If you have ring ridges that can't be polished out, yes you're in for a complete lower end machining, and at that point you need to replace all the wear items. It's pretty much been determined that, as of now, a new short block is cheaper than a rebuild, by far.
It doesn't sound like you have to toss the head though. I'd get a second opinion on the condition before I threw it away.