I have no experience with that repair shop so I can't comment on that.
It would be worthwhile for you to do some research on used prices for this lens. My impression is (but don't quote me) that you can probably get $1300-$1400 for this lens used. If that turns out to be true, I'd do an $800 repair even if the intention was to sell the repaired lens towards the purchase of the VRII version.
Personally I think the VRII version is "worth it" but I use the lens for FX landscape shooting, especially for stitching panos, so corner-to-corner sharpness and even lighting is critical for me. If you're primarily sports shooting where your isolated subject is centered and edges are out of focus anyway, or shooting on DX, then you don't stand to gain much if anything from the upgrade.