I wonder if the cylinders are scuffed. If they are then it would need bored out and either bigger pistons (if you can find some) or a sleeve put in. Do they use synthetic oil in those from the factory? If so, perhaps it is not too bad. I had an oil pump in a Bronco go out and did not drive it far when I noticed the oil pressure going down, but did have scuffed bore walls. The rings did not go out and I did not lose compression. I agree that you should go through it carefully if you do it yourself. $1200, how much could a new motor cost? You can get a 350 chevy motor for about that or less. That is a good reason to use synthetic oil though.

 

put a little light weight oil in the cylinder or fog it with WD40, leave the plug out and see if it pulls easily. Did you put oil in the motor after the fact? I am with rick it does not take long to ruin the cam running it with out oil, but the bottom end is probably okay.. Did you get a cheap push in compression tester and see if it has compression?
Did you get it fixed yet?