tjp, I’m afraid you have no recourse with the dealer. The engine is seized, most likely due to lack of oil pressure. With the truck out of warranty, the dealer has no obligation to help you here. And, they will want to install a new or factory-remanufactured engine.
However, an independent mechanic would put a salvaged engine from a wrecked Jeep into yours for far cheaper. Just remember, most salvage yards would give you a 90 day warranty on the engine, but not cover labor charges to remove and replace if it turns out to be a dud. You may get lucky and find one with less miles, but it would be common to find one with about the same mileage. Prices vary depending on engine option and availability, but I’m sure it would be much less expensive than the dealer.
PS. The oil light is there just for OIL PRESSURE. This is not OIL LEVEL and has nothing to do with the gas cap. That gas cap thing is a major red herring. I’d press the dealer mechanics to explain why the engine lost oil pressure with a crankcase full of oil. That sounds like an oil pump failure of major proportions. Did you buy the truck from a dealer AS-IS, or with the factory warranty intact? If you bought it from the previous owner, then in my state, it is an AS-IS sale and the dealer can void the warranty. You could possibly ask if you can get a ‘good-will’ offer from the regional office to lower the dealer estimate, but don’t hold out much hope there.