A lot of times if the sensor is in the hub it will come with a new one in it and you disconnect somewhere along the harness. Yes a lot of times if you do need to reuse it they dont come out with out breaking. You have the idea as far as repair goes. Turning the knuckle allows for more clearance and also remove the axle nut first. Without damaging the threads on the axle shaft push the axle back through the knuckle a bit. This should allow for more room as well. With a little patients these really are not bad to do. Might be helpful to have a torch handy. Sometimes the hub bolts are pretty rusted in there.My guess is that they quoted you that much A: anticipating problems removing the old one
B: They kinda just like to rip people off on things from my experience (quoted me tie rods when I just replaced em and took the truck there for an allignment)
Do it yourself. You can do it.