They really mucked up by retyping your material without getting a subsequent copy approval. I recently had a publisher do the same thing with an organization's magazine: it was real mess and very angering. We are still fighting over how much they are going to eat.
I would suggest to them that they have two choices -- rerun the whole thing correctly or give you an appropriate "discount" or refund.
If they have to rerun the whole thing, they loose the value of everything they have already run -- not something that they would likely think was a pleasant alternative.
I hope it was an arm's length business transaction and not a friend.
Troy
Those who shoot from the hip usually end up just shooting themselves.
Plan the grub and grub the plan.
Where is the party tonight? Who is bringng the drinks?