I'm not a mechanic and don't play one on TV but I think if the brake hose was "broken" the piston on the caliper wouldn't be pushing against the rotor. It's the pressure of the fluid in the brake lines that move the pistons against the rotors stopping the vehicle. You would also continue to loose brake fluid every time you stepped on the brakes.

Rotors do warp and there's a lot of variation in the quality and corresponding price of rotors. Just a quick look at the prices of rear rotors for my car from a national chain parts store - low of $35 to a high of $160. I'd suspect that repair shop used the cheaper rotors but they should still have some kind of warranty. Of course, that's going to be on the parts, not the labor but it's better than nothing.

Rotors rust but they shouldn't be rusted where the pads make contact. If they do, it's an indication of a bigger problem. Around the edges isn't that big of a deal but we can't see what you mechanic saw.

Frankly national repair shops and dealerships can be a little expensive. You would probably do better at a local "mom and pop" shop.