Free labor for mistake a good deal?

Hi, my car was heating up, so the mechanic fixed my water pump, charged me 600, then told me the heads were cracked and it needs a rebuild basically. So kicked up a fuss, cause he didnt do a pressure test first to determin the real problem, and the mechanic has now offered to do the work without any charge for labor, all i'll pay is the machining cost and parts. He's getting back to me with what that will cost. I am wondering, what should that cost without labor? (Holden Comm VP) And also, is that a good deal, the free labor? Or is he just ripping me off more, should I cut my losses and say no thanks?