Wow, sorry to hear that. Strange that they would push back with continued operation - are they saying you drove it without oil?
I still believe that a majority of these are caused by low oil level or extended change intervals and not a design flaw - 99 and 01s have the same engine numbers cast in them. I drove to MO to pick up a block that suffered this fate and can find no difference between cylinder one in terms of passageways, oil holes, etc and it IS closest to the oil pump. There have been several posts regarding clunking, 2 qts low and then driving it to the oil change place or dealer and them complaining that repairs are not covered. I hope this is not your issue. Engines fail for all manufactures and Isuzu has always been known for long life engines.