Sorry to hear the repair went bad. I would be very upset. I see the original posting was on 1-12-14. I don't know when MTH received your loco, but 2 months+ turnaround time to do the repair on the smoke unit seems excessive.That hot smoke unit inside that tunnel could have been a real problem. I would have thought MTH would prioritize this repair. If the loco has to go back, MTH should prioritize this and pay for the shipping as well.
I don't think the time was to repair the smoke unit, but rather get a new painted shell that had melted. G