In a shop setting, it is not standard practice to check the oil between filling it and starting the vehicle. Unless you are unsure how much oil the vehicle takes.
Working at a dealer you know vehicle D takes X quarts of oil. So you put in X quarts. Start the engine (run for 5 seconds and shut it down), then verify proper oil level.

You guys are way over the top with suggesting he should get a 100,000k warranty.
I would want a 1 year parts and labor but that is pretty standard
And getting a motor near or below current mileage should be do able (but those 4.8is engines are a rare beast)

But as has been pointed out both the used engine and his original engine (before this event) had unknown histories and you never know when something crazy is going to happen inside that engine.

BMW North America and the BMW dealer are two different organizations.
This BMW dealer could have hurt their reputation over this, but in my opinion they are trying to take care of it.
BMWNA in no way is going to take responsibility for this or loose any bit of BMW's reputation. The only thing they might do is call the dealer and see what is going on.