He definitely is over-estimating the cost.
To OP: if you browse through the classifieds here on POTN, in the past 2 months i've seen at least 6 17-40's for sale around $625-$650 all from sellers with reputable feedback. Of the 6, 4 included everything that you would get from buying new.
I recently just purchased my 17-40 from another POTN member and was stuck playing with it yesterday for 4 hrs on a 50D. The IQ is good. imo the 16-35 is not worth it. the 17-40 is your best bang for the buck wide angle lens... if you stay on crop why not consider the EF-S 10-22? But 17-40 + FF = killer combo. i cant wait till my 5d gets here so i can try it out with my 17-40.