No offense meant, but it really seems like your dealer dropped the ball.
It was mentioned here previously that the loader was made by another manufacturer which could of caused some delays in a solution.
Honestly, if the loader has the Kioti name on it, it is Kioti's responsibility to take care of their customer "first", then deal with the manufacturer in question (pertaining to the loader).
Of course, Kioti could be offering a "solution" to see if it would be acceptable, and already have another "course of action" planned if the original solution was not acceptable to the end user.
I would also think that it is up to the dealer to go directly to the manufacturer first and see how they want to handle the issue. Perhaps this was done, perhaps it wasn't.
That being said, I would think proper procedure would be to go to the dealer first, then if the "solution" is not acceptable to the end user (AKA "the customer"), then go directly to the manufacturer.
I will say this, I'm still looking for a tractor, and Kioti was "up on the list" but I'm finding this thread VERY interesting. HB, you are handling the situation far better than I would of if it were my money spent.