If this is 7-speed, then I can understand his recommendation if your 7-speed STI shifter is worn out. You can no longer get 7-speed STI shifters from traditional sources, so would have to replace it with 8 or 9 speed and then upgrade the cassette to 8 or 9 speed. If you upgraded to 9-speed, you'd find the spacing between the chainring too wide for the new chain and need to replace the whole crank too. But if the STI shifter is fine, all you need to do is put on a new 7-speed cassette and chain (assuming those are needed). If the shifter is bad, ask for 8-speed, because 7 and 8 speed chains are the same and your crank would then not need replacing (unless it is really worn out).

Oh "whacking something with a piece of pipe to spread it" is cold setting. Actually not whacking with the pipe, but pulling with the pipe. Cold setting just mean bending steel without heating it. But I wouldn't let any bike shop guy do that. If you want to spread the rear triangle, take it to a framemaker with a jig who can align the dropouts correctly after it's spread.