Water pump replacement need advice on mechanic estimate

I have 2012 Toyota Prius 4 with 150k miles. I am getting following check engine light P261B

This is my old post for the same issue Radiator dashboard lights ON...what does it mean | PriusChat

Radiator light is getting On, Coolant was getting empty after driving at a speed of 70 mph. Once car went into limp mode.

Mechanic diagnostic findings:
Under Vehicle:
Oil leak on rear of motor possible head gasket leak or timing chain tensioner leak start at top of engine and work down valve cover gasket starting to seep oil on rear of motor. recommend replacing valve cover gasket pressure washing engine and readvising.

Tested for power and ground at water pump connector found good voltage and properly grounded. Tested signal wires for pulses going in and out of the water pump found that the return had more pulses than needed causing codes in ECM. Watching live data when pump was commanded to 3,000 rpm actual calculated rpm was 6,000+. recommend replacing water pump and retesting. low coolant level most likely do to vehicle over heating and spraying out of coolant reservoir pressure tested system and found no obvious leaks. faulty water pump can lead to over heating. Recommend replacing thermostat housing due to overheating issues.

Attached is the estimated cost report. I am confused with the repair cost. Do you guys think this is acceptable?
Do you think its worth replacing it?

 

I wanted to make sure mechanic diagnostic can be focused on this post hence created a new one.