Sounds like you are getting ready to lay down. If you don't ask they ain't gonna volunteer.
Before you accept the car test drive it WITH the owner, if all mechanically is okay then it's time to bring up the damage. Once your dough is in his hands it will tend to remain there.
Bang On! As soon as you hand over your money you will not see it again! If you are not happy you should say something, even if its only to express your dissatisfaction. As mentioned take the car for a test drive (with the mechanic) and before handing over any money bring up the issue and show them. If they get all hard nosed and funny then you have the option of just paying up and leaving or taking it further. If you pay first and then bring up the issue your mind is made up for you, the only thing you can really do is pay & walk. That would be how I would approach it, and theres no need to bring it up in a nasty way, be nice at first and you never know. If you approach it like this and they are reasonable I think the most likely outcome is that they knock some money off your bill as a goodwill gesture. That way you get something back and you can get the work done properly yourself. I doubt they would take enough off to cover all the damage but at least 1/2 if not a bit more.