Looking at the Calfee website (http://calfeedesign.com/repair), I think they could repair it even with the top tube cut, though I'm sure that would increase the cost of the repair. Their repairs have a 10-year warranty.

I'm going to call the bike shop with more questions and to get a full picture of the total costs involved, including costs to strip the components if I send it to Calfee and the cost to rebuild the repaired/new frame.

I would also like to try to find out what kind of impact Trek thinks caused the crack. It runs along the length of the top tube. I'm wondering if this could be caused while riding, such as by hitting a pothole, or if it's something that would be caused by an object striking the frame.