Opinions wanted

[RidgeRunner]

Let me apologize for the long winded post as usual. Bold cuts to the chase.. Here is the deal- I traded in my used 90 hp Johnson outboard in exchange for some rigging labor on my repowered skiff a few months back.
The motor was still running, I had just been 40 miles round trip to my favorite fishing hole before putting the boat on the trailer and bringing it to the dealer for the repower. I am very realistic, The motor was rough looking, had considerable corrosion issues and it was just used up IMO.
I was not looking to hang someone out on a bad deal. If anyone knows me they would know I would sooner give it away than charge you a penny more than I know it to be worth..
This past weekend, the dealer tells me that the motor was low on compression and he would be scared to sell it.
To Be Clear: I am NOT DOUBTING WHAT MY DEALER IS TELLING ME. THE MOTOR IS LOW ON COMPRESSION. It is a POS. Assume it to have destroyed itself. NOW--

Question(s):
1.Do I have an obligation to my dealer to ante up a little cash to ease the pain on the old Johnson turning out to have one or both feet in the grave? He is asking for nothing. I feel bad about the motor, bad about him not turning into green and worse because he has struggled and I know it..
2.What is the labor for rigging a motor normally run? I was thinking he could get $500 for the old motor, for parts, pieces, prop, etc.
Maybe split the difference? I know he paid his Merc man at least a half a day to do the rigging. It was and is a nice job.