How did they "decide" it was a fuel issue? Assuming you actually used gasoline, no fuel sold in North America should do that! Comment above relating to paint thinner and diesel fuel comes to mind.
Probably too late to see if there was an oil overfill or to get a sample for diagnostic analysis. That might tell you if a mechanical issue was a root cause.
Unless you can DIY, clean and rebuild is a lot of shop hours (but maybe not parts) and , as suggested by
@SkooterG , a low mileage eBay engine is likely cheaper.
Local rep? I think I would try to escalate it to corporate HQ before giving up. I bet your local guys just didn't want the hassle - I wonder if the dealer actually talked to anyone? Who ever heard of denying a valid warranty claim on an engine failing for "bad fuel"? ******** comes to mind...