Have you used this marina/mechanic before? Do you trust their word? Like ric suggested, it "could" be a load of bs to get your $$$. Take it to another shop and get a second opinion, especially with something that has the potential to be very expensive. However:
Steve D wrote:
There are signs that the overheating condition has occured for a long time. (the bilge pump hose and blower tubes were melted and all the exhaust rubber hoses were burnt and distorted)
That is not good. That indicates almost pegged temps for sustained time, which could result in head gasket and/or cracked block. As far as any specific test to determine which? Not that I am aware of. First thing I would do is go to the marina, crawl up inside and check the oil yourself.