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if that is all that he finds really wrong with the car, i say take it back. there is also always the chance of no bent pushrods if you were at low rpm when it ate the water. if it turns out to be just a pushrod, NBD. replace, reset valve lash, start engine and drive away. 45min job at most.
i woudl suggest checking into your policy if you take the car back too. as long as you get a clean title they will have no reason to reduce the coverage level because the car has been declared safe by the state.
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