The dealer's prices are always a lot more than a private mechanic. I would take it somewhere else to see what they have to say. $1200 for bearings seems a bit absurd...
Try draining all the gas out of the tank and fill it up with apple juice. Run it on that for 6 or 7 days, then hold a strainer over the exhaust pipe and check out all the nasty stuff you're cleaning out of your engine!
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