Not trying to kick this mechanic when he's down, but IMO he shouldn't be doing timing belts unless he is capable and willing to also do corrective repairs that are caused by his mistakes. Do enough timing belts and a few jobs will go South - $hit happens. Paying retail prices to another shop to fix his mistakes doesn't seem like a professional operation to me.

Next, I just cannot understand this story about "dropping a bolt into the housing". I've done 3 of these jobs, and the only thing I'd consider possible to drop in is one of the timing cover bolts. But he would have to know that there was a bolt short on the cover, and that would be a huge red flag for any competent mechanic. Sending a repair job out the door plus or minus a bolt is a hack job.

But regardless of that story being true or not, he's admitted to making a major mistake, and that is enough to close the case right there. Even if here was no admission on his part, he would still be on the hook, unless he can show that you spend your time redlining your Aveo around the track (and even then a timing belt job should last more than a few months).

I understand the "family" and "nice guy" thing, but it's either him or you. If you decide to bargain to some middle ground, that of course is your call. In that case you could consider it a non-deductible charitable contribution.