It all sounds confusing as it's a warranty claim yet you have to pay something ($1500) out of pocket while the mechanic couldn't fix a simple lifter issue on an AFM V8. I'd still focus on sorting out the warranty side and why AFM now doesn't work (something any capable mechanic should be able to explain)...
Guess it all comes down to what you really wanted as the repair decision should have occured and been costed before work was started.
If you wanted to retain AFM to keep the car standard so you don't have to tell an insurnace company it's modified, then you definately need to sort out the above warranty repair of AFM lifters. If you actually wanted to delete AFM, once you decided to act on the lifter tick and chase some extra power, that's a different issue which you would have first researched and decised before your car was in bits... I'd not want a mechanics incompetance with AFM issues to cost me more $$ on a warranty repair that should not cost me nothing to begin with
As to installing a LS3 cam in L76 V8, not sure what that even means as a CAM is speced on value timing, lobe sepatation and lift and other stuff i don't know about. And i don't think LS3 only came with one CAM spec (it's used in lots of applications) so who knows what he is actually planning to use and whether i'd be ideal on your L76? There just isn't enough info to state anything other than he can't sort AFM issues so of him in doing a CAM upgrade on my car.
Seems like the mechanic me be pushing you around and telling you some stories for his own benefit and i guess i just don't like doing business in that way