2002 Subaru Outback Outback H6 3.0 Dead. No compression

The car had been running flawlessly, no signs or symptoms of a problem. About a month ago, took it in for inspection and an oil change. Probably put about 2,000 miles on it since then.

The other day, went out to start it. It started, and then stalled. Wouldn't fire. Seemed like the timing chain. Had a mechanic look at it to replace the chain, but turned out the chain was fine. What he did find was that the car was down 2 quarts of oil, and after some test and investigating, he did a compression check. When turning the motor over, the gauge would bounce but only down in the 20psi range, rather than 240psi (or whatever the correct compression is).

I'm no mechanic, but I do have some mechanical experience. I keep up with the oil regularly, just hadn't checked it since the oil change, assuming that it would be fine. There has been no oil drip, no oil burning, nothing that would cause the car to "go through" two quarts of oil in 2000 miles right after an oil change.

It is fair to question the garage where the oil was changed? Is it possible that they did not properly fill the reservoir? What exactly occurred that caused this complete engine failure at only 114,000 miles? Would it cost more to repair than to replace? Any other thoughts or comments?