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IF your oil cooler popped, the reason they are probably saying it needs an engine is because the coolant passages are clogged up with oil/coolant mix. It makes the coolant look like axle grease in there. The overheat was probably because the water pump couldnt move the coolant. They replace the engine just for that, not that it necessarily damaged the engine, just that its pretty much impossible to clean all that gunk out w/o completely disassembling it.
During the warranty appeal, they will look at if you bought the truck at that dealership, your service history with ford and your maintainance records. In my opinion your best outcome is going to be Ford pays for maybe half, and ask you to pay for half, somethign like that.
5 Year Ford Certified Diesel Master Technician
Specializing in: 6.0, 6.4, 6.7, and 7.3 Powerstroke Diesel
Currently Employed as a Diesel Technician for the
Walt Disney World Resort in Orlando, FL.
Specializing in: Detroit/Cummins/International