Re-built can mean one of two things.. I know of Re-buiders who label it "Re-Manufactured" this means the engine is fully up to manufacturer's original specs, it is as good as a brand new one, possibly better. Re-built, however, may not be as good.
Warranty is good.
Now, as to the broken pistion, Some owners chip the blazes out of their engines (Various performance improvement devices, schemes and systems all "guaranteed" to give you better performance and better MPG, Usually by Fly-By-Night guarantee corporation) NOTE: I am not describing either Banks or Ultra Power here, but the hundreds of "no-name" outfits that are here today and gone tomorrow when your engine blows.
Redlands, once told of a short period of time when not one but SIX Workhorse owners came in with identical piston problems, 3 had the Ultra Power upgrade (Redlands ate the cost on those) 3 were stock (Workhorse covered it) .
Brazil's has done the same for some of their customers, These are the #1 and #2 Ultra Power dealers (Do not ask which is #1 cause I do not know)
Banks I've never heard thigns like that about but they do stand behind their product.
IF The engine has had "modifications" other than the UP or Banks systems.. I'd see if that mod can be reversed.
In one week I spoke with the national service manager for Workhorse (Who told me of a much modified 8.1 with a hole in the pistion and how he'd had to deny warranty) and a Customer Service Rep for FORD, who told me... The exact same story with a Ford Sportscar instead of a Workhorse.. Same level of "Upgrade" and the same damage.
The rest of the Workhorse story is funny, but I"ve tole it already. (The local ASC told me they could not gat a part in less than 2 weeks so they could not do a recall.. Alan handed me the part, and his card, not 4 hours later.. Turns out I was on his way home from work
2 weeks later I handed in the part, stuck to the card.. Amazing the service I got from that service center after that, Alas, till they went out of business (Closed by GM).