Tim, take a look at this picture
Does that look professional to you? It doesn't matter how good Scott or anyone there can weld, they tried to pass this off as acceptable, on top of that they expected to get paid for it. Would you pay money to have this done to your axle? I would pay someone not to weld a bunch of crap like that to my axle. More so, this is far from the first time I've heard of stuff like this from this shop. Do a search and you might surprise yourself.
In my oppinion, they deserve to be paid for the parts, thats a given. However, the workmanship is by far the worst I have ever seen come from a "professional" shop and they shouldn't receive a dime for it. It's going to cost him more now to have that removed and installed correctly than if they had done it right in the first place. So I'm not sure what they want paid for and I don't see why they're withholding his parts.