For starters it wasn't the vibration that lead to the failure of the driveline, so the balancing of the shaft by teh shop wasn't the eason for the failure. A vibrating drive shaft will normally cause premature failure of the u-joints, not cause the driveline to tear itself apart. A bent d-line will cause severe vibrations and then the damage that you have. Since you weren't wheeling, and basically just put it on, you would have noticed it being bent. By the look of the pictures, the shop didn't use the right size tube, it should have been atleast a 3" thick walled tube. What basically happened was the first time you took off the d-line twisted a little bit, and continued to twist each time you took off, shifted gears or used hard acceleration it twisted more untilt it couldn't resist the stresses being applied and tore itself apart.

You have a product liability claim against the shop, as I am sure your attorney friend has already told you. They made a product that you used as it was intended to be used, the product failed and caused your damage. You are entitled to have the fuel tank replaced(the dent will reduce the mpg range of the tank by a few gallons by the look of the dent.), the sending unit is a result of the damage and so is the skid plate, as well as as being reimbursed for the cost of the driveline. The shop owner has already admitted they made a poor product which he was willing to replace or refund you the money, he can't claim he is liable for the rest of the damage.

The shop can't use the length as an excuse either, they are the experts here, if they didn't think it could be done, than they shouldn't have made you one. They new that you intended to use the driveline on your truck, and that it needed to be over 60" long, so they should have built you a driveline that could withstand the forces being applied to a driveline that is over 60" long. Toyota didn't make a one piece for the 3rd gen trucks because 60+ inch d-line was to long, they didn't make one for cost and clearance issues. A 2 pc d-line is less suseptable to being bent on the trail, and they could use the same size tubing for all their vehicles.

I have had a 1pc drive shaft for over 9 yrs with 70k+ miles on it, and the tube is as straight now as the day it was made. The 1pc on mine has also been abused on ice(in deep snow) and on the rocks. It also sits behind a mod'd 3.0 and has to move around 5k lbs on a daily basis while turning 33" tires. If a 1 pc was not going to work as the shop owner told you, mine would have failed long ago.

The $300+ shipping sounds about right for a d-line, that is what I paid for mine 9 yrs ago, and is what I was quoted for an additional one about 2 yrs ago.

Since people don't normally higher an attorney for civil damages under a $1000, recieving one from an attorney should scare them a little bit. They should be happy the damages is relatively small, they could be looking at a totaled vehicle and personal injury claim, or multiple claims if you had caused a multi-car accident.