You're right, they should just stop selling individual head gaskets for these engines and only make them available in rebuild kits.
While the top end and bottom end are in the same engine, the only time a blown head gasket correlates with a bad bottom end is if you ran it with water in the oil too long. The excuse that a new head gasket will cause the bottom end to go bad is dead wrong. If the bottom end starts knocking after replacing the head gasket, the bottom end was already bad and the head gasket was bleeding off pressure, hiding it.
It's also incumbent on the shop to perform a diagnosis. What's the oil pressure? If the oil pressure's 5 psi at 3000 rpm, then it's time for an engine. If it's 35 psi with the blown head gasket, the bottom end isn't going to knock just because you put a new gasket on it.
The shop needs to make the customer aware that it's an old engine, but they also need to lay out the evidence. At the end of the day, it's the customer's risk. Have them sign paperwork explaining that they took the path you didn't advise. If they choose the risk, get burned, and then come back whining, get a backbone. Tell them how much it will cost for an engine replacement and show them where they signed to take on the risk.
While the top end and bottom end are in the same engine, the only time a blown head gasket correlates with a bad bottom end is if you ran it with water in the oil too long. The excuse that a new head gasket will cause the bottom end to go bad is dead wrong. If the bottom end starts knocking after replacing the head gasket, the bottom end was already bad and the head gasket was bleeding off pressure, hiding it.
It's also incumbent on the shop to perform a diagnosis. What's the oil pressure? If the oil pressure's 5 psi at 3000 rpm, then it's time for an engine. If it's 35 psi with the blown head gasket, the bottom end isn't going to knock just because you put a new gasket on it.
The shop needs to make the customer aware that it's an old engine, but they also need to lay out the evidence. At the end of the day, it's the customer's risk. Have them sign paperwork explaining that they took the path you didn't advise. If they choose the risk, get burned, and then come back whining, get a backbone. Tell them how much it will cost for an engine replacement and show them where they signed to take on the risk.