@N80 - Not trying to cause a big debate & I don't know the laws for residential contracts in SC... but check into them; I deal with them on a daily basis as a contractor.
If you had a legal contract (again depending on state laws)... or better yet he gave you a contract to sign that does not meet the state requirement, then he breached it (or broke the law) & you should be able to recoup most of if not all of your deposit... even if he has to take back the materials at his loss... This contractor is not your friend, nor looking out for you, make sure you are not treating him as such...
We deal with masons / tile / stone contractors all the time, there are great ones & not so great ones... I don't think they are any harder to deal with than any other trade... no even with a language barrier.
If this was my personal project.. I might look at it a different way based on your description... First I would get every cent back from the original contractor including the materials delivered; he can have them back... they are doing you no good & may not even be correct based on who you hire to do the job (how they would do the job) & especially because they do you no good uninstalled, (they are just raw materials not a partially finished project). Granted you may have to pay for the footing he installed (hopefully correctly), but I would even question that being he has not fulfilled his contract on two separate occasions. Again, I hope you have a sign contract...
Now if this was a retro fit wood burning fireplace I was installing on a pre-existing cabin I would probably look at prebuilt wood burning firebox design (maybe even with a blower to recoup some of the heat back into the building when needed), that can use zero clearance stove pipe as its chimney. I would cut the opening as you mentioned, install the fire box & run the stove pipe up the exterior of the cabin. Then because it is zero clearance pipe I would frame in the exterior pipe to look like a traditional chimney & face it with stone or brick veneer. I would finish the interior to match. You wind up with the traditional look you want, with the added benefit of recouping heat, a stove pipe chimney (easy to clean), & all probably for less then a full masonry chimney but with very similar or the same look...