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I was a mechanic and service rep at Lexus for several years.
We had several IS and GS models come in that qualified for a rebuilt engine under a technical service bulletin. I don't know if GM has anything like a TSB but relative to Lexus, if a car has a TSB it essentially is a widespread known issue/defect that will be replaced/repaired under warranty even if the vehicle is out of warranty. It is widespread but not widespread enough to be considered a recall of any kind.
I can't recall off hand what the known issue was but essentially, the engines got rebuilt under warranty. I personally never worked on those cars.
The engines qualified to be replaced with crate engines but the reason my particular dealership along with others, and I'm assuming yours, rebuilt the engine is because the mechanics and service reps get paid significantly less per job when it's a warranty repair versus a customer paid repair however by rebuilding the engine, Lexus would let the dealership bill them for 30 labor hours versus replacing the engine would have been 15-20 hours. My guess is that is ultimately why they chose to rebuild your engine first and nobody has the balls to admit that to you. From your seat, it looks like rebuilding would save the dealership money but they are actually able to bill GM MORE than going the replacement route.
Of course, this is all speculation but this is certainly how it worked at Lexus when I worked there.
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