When I went to sign up at Apple genius bar and this is the statement on the web page they will estimate how much it will cost to repair you item-
I more than likely will go anyways but what a pain and it's 2hrs away!
Just sad this happened just taken Apples update and then to fix it they want $$$$$.
More than likely they can go in and by pass the verification stage and it will restore just fine.
I might even just pursue going through my credit card company since they extend the warranty period for one year.
That repair cost I think might just be the standard company line about an out of warranty replacement, if that is the website that you are referring to. There is no charge for an Apple Genius' help. I had no idea how near to or far from an Apple Store you live when I made the suggestion.
I certainly understand your disappointment and frustration with this situation, and I would probably fee the same way if I was in your position. Contacting the CC company might not be a bad idea - see what they say. It worth a try.