My Legacy diesel (2009 26,000 miles) was experiencing a sudden loss of power under hard acceleration, such as overtaking or pulling out at a junction.

Between Christmas and New Year it was diagnosed by the dealer as a seized turbo which will be replaced under warranty.

Ever since new the engine has been very noisy starting on cold mornings. I was discussing this with the service manager prior to the turbo diagnosis and he implied that there were certain problems which might involve engine replacement under warranty.

If an engine exchange is not on offer what potential damage could the seized turbo cause to the rest of the engine and what checks should I insist be made?
The car has been serviced on schedule by two separate Subaru Dealers.