86 560SEL jammed timing chain?

My '86 560SEL with 63K miles has suffered serious injury and my mechanic and I disagree with how to proceed. What do you think? Here are the details. One morning went out and started car, shifted into reverse and thought "something doesn't sound right". Shifted back into park and opened hood. Heard what sounded like valve tap but a much deeper and clunkier sound. Engine, however, is running perfectly smooth, no miss or shake and oil pressure is up and normal. After about minute I decided to turn it off. Tried to restart and nothing. Just a click as the starter engages but no engine turnover. Engine seems to be locked. After a number of weeks I finally had the car towed to my favorite MB mechanic. Since he really only likes diesels, (and i have two-84 and 85 300SD)he says "told you these gassers are junk". I say "lucky you're a mechanic and I have a broken car"!! Engine won't turn over by hand or anything so he takes valve covers off and discovers the hydraulic chain tensioner has failed and the timing chain is loose. BUT he can take up the slack of the chain and turn the engine by turning the valve cams, then the chain, then the valve cams, etc. So obviously something is jamming down below. He takes the oil pan off. No debris in the pan at all, just very clean oil. HERE's the IMPORTANT part. He is able to slowly turn the engine as described above AND at TDC everything is perfectly in alignment. Cams shafts perfectly lined up with the mark, timing etc. So the chain has not jumped or slipped. Mechanic still says, you'll have bent valves and need to take heads off and rebuild etc. I say, how can the valves be bent if the engine was never out of time!! He says, the chain had enough play in it to allow the cams to be out of time without the chain jumping. I say hogwash!! I say, do a leak down compression test first to determine if there are potential bent valves. He says, it's a ton of work to tear the front of the engine off to replace the chain guides and chain and might as well just go whole hog and do the heads as well. I hate to pay for unnecessary work!! So who's right? What should I do?? BTW, does you little book on the V8 engine recommend changing the hydraulic tensioner at a certain age? Wish I had known that. I only got to drive this car for about three months before this happened. I bought it with 53K and put about 10K on it. Thanks for input.