$850 should be for a brand new, not rebuilt, Toyota OEM rack (actually slightly on the high side but not bad for a non MUD dealer deal

); there's a couple special o-rings for the oil cooler that need to be replaced apart of the rack replacement. You will probably need a little coolant and you may, or may not, need the pressure and supply (sold as one unit) power steering hoses (mine could not be removed without cutting); possibly, depending on whether or not your rig is/was from a rust belt state: Steering shaft(s). And while your mechanic is there and they are relatively cheap I'd have him replace the two oil cooler hoses too given your rig is 10-years old.
$200 labor is a BARGAIN! Make sure the two bills labor is a valid and fixed quote! FYI: I think book time on this job is 5-hours.