Lycoming camshaft

Got a IO 360 Lycoming L2A in a Cessna 172. Approx 500 hours since last overhaul by a major facility. Cam was not replaced at last o/h and at that time engine had run 2480 hours. They fitted tappet bodies p/no 72877r ohc which I take to be overhauled. We have ferrous metal in main filter, enough to cover your little finger nail. Do you think we are over reacting going for warranty? I haven’t pulled a jug yet.  There was also a small piece of metal which looks like the tail of a cotter/split pin. 

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No I do not think you are over-reacting. Something inside the engine stinks and it ain't getting any better.

The principle stress on cam and cam followers is below the surface. Fatigue failure is cumulative and starts below the surface as a crack which eventually reaches the surface and releases a flake. Inspecting and resurfacing "reconditioning"  the surface does not restore the fatigue strength. Failure is only a matter of time - total time. Zero time requires that you go back and melt the steel and start over.

Camshaft visual inspection guide