Sounds like it will need a rebuild if the piston is scored. Does not necessarily need straight fuel to score the piston, it it has been running lean or getting hot it can cause that as well.
If you were willing to DIY the rebuild, a piston, ring and o ring kit is $50 on ebay, otherwise $350 is actually quite reasonable considering todays labour rates. might be worth asking around though to see if anyone might be cheaper, beware of backyard deals, Some are certainly genuine, a lot are very dodgy though unfortunately.
As far as a new one goes, yes you get a warranty, but the deck is steel and very thin, the new Briggs engines are something you throw away if it needs anything more than an air filter, and are pretty rubbish in general. With a rebuild and some care you will get another 15 or more out of the 2 stroke, expect to replace the new ones every couple of years.
