Turbo is bad, but why? Excessive shaft play, stuck wastegate, do you have any engine codes, do you have a boost gauge, smoke from exhaust, oil residue inside intake piping?!
Turbo is an HE351CW. You can find good used ones (bolt in ready) all the time on CumminsForum.com, sometimes for a 1/4 of the price that you've listed for a new one.
It isn't hard to replace (is harder than on a 2nd Gen Cummins because of the exhaust manifold difference) but not a bid deal. Could be done on a Friday afternoon.
Factory replacement
$1529ATS Aurora 3k upgrade
$1490Holset Cheetah drop in
$1755Just shows that you can upgrade for less money and bolt it in yourself!!! I would try to find an aftermarket turbo in the 62/65/12 to a 63/68/12 for stock fueling. The stocker is 60/60/9. That Holset Cheetah is one of a few excellent choices for a drop in replacement; there are more!