Really sorry to hear about your problem. To answer your questions.

With the timing BELT getting loose (tensioner gone) the valves and the pistons in this "interference" engine design try to occupy the same space at the same time, usually bending valves and/or damaging pistons. So the 2-4 grand is not unusual.
Your call on fix/sell/trade. You could look at a lower mileage replacement car, but the dealer should be able to make your engine like new, and then you have some new warranty on the repair, I would imagine.

Should they have replaced the tensioner during the original belt change? They were trying to save you money based on their experience with the longevity of the tensioner. Waiting for 95000 the first time had NO affect on this failure. You were close to the time (2x 70K) when it could be argued that the belt should be changed again and they would have replaced the tensioner too, but still within their expectation for the tensioner.

Tough call. No additional advice at this time.