Service blocks were commonly modified to suit the application. You are right that hydraulic lifter engines were made from solid lifter engines by drilling out the obstruction. However many later service blocks were drilled both ways, with removable screw in allen plugs. You may want to get him to clarify this. He may be using "drilled" interchangeably or it may be a mis characterization
Late 1966 blocks on were this way, they came drilled tapped and you either took out one of the two set screws to allow
oil to pass into the lifter galley.
It really isn't a lot of money considering the balanced rotating assembly alone is $2,000. Plus assembly $800. A quality prepped block is almost $3,000. Yes it has sleeves but it has 8 and will give you a better truer surface for a good long time. I can't tell you what 8 sleeves cost to install but I bet it was $800-1200.
It wouldn't surprise me if this block's owner spent $6k getting it this far. Call Doug and ask him.