Your motor do it your way, but for me things are perfect when things are done the way that I ask them to be done.
And I always tell the machine shop how I want the work to be done. And when I say I tell the MS how I want the work to be done, what I actually do is, ask plenty of questions, dig into the answers so we actually have a discussion of what will be done and how it will be done. If it is a shop I have not worked with I will want to review the equipment and gauging. I always get a written estimate that describes what is to be done and the price and the timeframe.
To the OP, you discussed with them, not once, not twice but three times that you wanted the pistons size matched, that you wanted the final hone done with a torque plate and you never agreed to the re sizing of the mains.
I would be having a face to face with the MS owner and what I would be expecting is for the MS to replace the block. I would definitely take the work on that replacement block else where.
It’s not a question of ‘will the motor run?’ It certainly will. The question is, why do folks do as they want and then expect top dollar payment, especially considering the fact that the OP gave the MS at least three opportunities to explain why a torque plate is not needed and final bore hone does not need to be sized matched to the pistons.