Still don't know how much he's going to charge me, or if he's going to eat the cost of the replacement motor or the time to do the swap.
You had a fully-functioning motorcycle with no shims bouncing around the combustion chambers when you dropped it off. You should be charged the cost of the work he was going to do originally (valves and fluid changes). Anything beyond that is a result of his mistake, and if he's honest, he'll eat it.
A few recommendations:
1. The exhaust system had coolant run through it, and that may not be good for the catalysts. If they end up clogged, you may have performance problems.
2. The valve clearances on the new engine should be checked, only those outside of the spec should be adjusted and you need to be provided with a full list of the measurements for each one. Comparing that with data from the next check in 16,000 miles will give you useful information about what in the engine is changing (if anything).
3. You should arrange with the mechanic for a no-charge visit after 1,000 miles or so to go over the fasteners that were disturbed and make sure they're still properly torqued. This was SOP on the bike when it was new from the factory and should be repeated after such major surgery.
And, still have no actual documentation of the mileage on the replacement motor. He said it was 16k, but the crashed bike had a wrecked instrument panel, so the re-issued salvage title just indicates unknown mileage. Not sure how that detail will be addressed...
If the engine is in good physical condition, I wouldn't worry too much about it. They live a very long time, so whether it's 6K, 16K or 60K is probably not going to matter.
Your bike will have the same dashboard and ECM as it did, so the odometer will read the same thing. The new engine is technically a salvaged replacement part and won't have any effect on your title. You might check with your state's motor vehicle department and see if they keep records of engine serial numbers and update that information if they do.
--Mark