Seems a bit fishy. A good shop should have been able to take a good look at your boat and give you an accurate ballpark quote/estimate before the work begins. IMO, for all those extra costs to pop up obviously they didn't make a great effort to look the boat over before it went in.
We've recently had a bunch of work done on our welded aluminum river boat. Swim grid welded on transom, custom down rigger brackets made, and some other stuff. Before I agreed to have the work done the staff member and I took a GOOD look at the job, I asked any questions I had, and the ballpark price was agreed on before I left without my boat. With the swim grid we recently had done, the guy called when he was working on it and suggested I add another gusset to reinforce the other side of the grid. He said it would be about another $100. I trust the guy and his explanation made sense so I gave him the green light.
Anyway, if I were in your shoes I would just pay the bill, get over it, and not go back to this boat shop. I use both Balmer Fabrication in Abby and Venture River Boats in Chilliwack and would highly recommend both. I feel like they work on your boat like it is their own boat. Neither of them do cheap work, but I have never had an issue with a huge surprise bill.
A couple more thoughts...
You said you told the shop your budget was 1000 +/-, but did they actually agree to work the work within this price point? In other words, your budget is a moot point if the going rate for such a job far exceeds what you'd like to pay. At any rate, IMO a good shop has good communication, takes a good look at the boat, and give you a accurate estimate.
Case in point: had my boat in to get the swim grid welded on. Shop calls after it was in for an hour. Turns out the stern is full of expanding foam which could smoke or catch on fire! Guy said could be 2-3 hours labor to carefully cut out the foam properly (at 100 bucks an hour!). I said I'll come get the boat, do the foam work myself (took about 2 hours to carefully cut around all the hoses, wiring, etc + clean up of foam bits EVERYWHERE) then I brought the boat back another day. Point here is they could have just did the foam work and billed me for it and told me about it when I came to get the boat. But they didn't, they called and kept me in the loop, and asked for approval before doing work that was going to well exceed the $ estimate. Now THAT is a shop I'll go back to!