There are a lot of factors to consider in this really frustrating situation.
The first is that it indeed is too costly to file suit relative to the loss involved. This gives the business owner power over you.
However, to the extent that you are able to document your statements and not cross the defamation line, you are able to spread the word about the business and the tech, which in the internet age can have significant impact on future sales - giving you power over them.
Lastly, there is the issue that every time you you buff down a horn, you alter it - although a 65 strad bell bow is pretty beefy, so probably not that much of an issue and brand new epoxy will blend seamlessly.
Seems like negotiation with the business owner is the place to start - just have a range of options you consider acceptable predetermined. Should that fail, you can then choose between a scenario where you lose, or one where everybody loses. Personally, I find that follow through makes it clear to the next guy that I am not bluffing..
In any case, I would assume you will not be patronizing that business in the future.