Thanks everyone for the great comments! I really appreciate it. My heart certainly sunk when I opened the shipping box and found the crack in the chainstay. The repair was done by a well respected local frame builder and he said it was an easy fix. There was no damage to the chainstay tube or the dropout. He basically just fixed the joint as you would when building a new frame. He did say his joining method was stronger than Kona's method (though it does look a bit different).
Most of the red portion of the bike was repainted. My painter said it wouldn't be much more $$$ to do the whole back half vs just doing the dropout area. Plus it would be easier to blend. The "Handmade in the USA" sticker on the seat tube was gone and there was numerous touch-up areas on the red portion so it was an easy decision to just have the red redone. Clear was shot over the entire bike and then cut/polished. The whole bike truly pops now, especially when seen in person.
As for the "Handmade in the USA" sticker goes, it looks like one of the previous owners over tightened the front derailleur and it pinched the sticker. They then used a decent amount of touch up paint to cover up the exposed area. Any previous owner want to chime in?
1997 Kona Hot
1996 Kona Hot
1996 Kona Hot Stars n Bars
2010 Carl Strong custom