Certainly can’t tell you what to do and my thoughts may be far from perfect... but I can tell you my opinion:
1. I have read of and seen pictures of too many problems with the lower mounted spacer causing issues for me to feel comfortable installing that. For me personally it was off the table even if the dealership says “we’ll fix the issues for free every time it happens”. Should you decide to do the lower mounted spacer I would 100% get it done at the dealership and have in writing they will fix any issue that it causes. I would not get one installed anywhere else.
2. I used to be very cautious concerning doing anything that remotely might effect the warranty. As time went on I realized by doing things the right way, the warranty concern shouldn’t be an issue. Any problem will have to be directly caused by X and proved by GM that X caused it. And many/most items should have their own warranty. Personally I am not concerned about very simple things like a top spacer 2” or less or Bilstein shocks. It’s pretty straightforward. But, I would be careful if more and more things are further added together changing the geometry of suspension parts and stress points.
3. $880 is just way too much for me to pay for a “cheap” spacer to lift the front of my truck for aesthetics and no performance improvement. For me it would be similar to getting a $15 McDonald’s burger when an alternative would be spending $15-20 at a great high quality burger joint in town. I believe the lift spacer itself is what $60 maybe? I would suspect you can get the Bilstein 5100 front shocks installed with alignment done for that same price or cheaper at any competent shop. If it’s more, it shouldn’t be that much more IMO.
I can’t remember the exact amount I paid but call it roughly $600-650, maybe $700 is what I paid my local shop in Houston to (1) install front Bilstein 6112’s, (2) rear Bilstein 5160’s, (3) 2” rear lift block, (4) rear bump stop extension, (5) balancing and alignment on the new tires I purchased from them. The balance/alignment/etc costs were maybe $25 a tire, so 100 for that? The actual parts install should be about 550. Say take away labor for the rear components and I’m betting you’re right in that cost point the dealership is charging you for a spacer.
My 2 cents. Hope others will chime in with their thoughts because this forum gave me a ton of information as I was choosing to do. Best of luck!