That option sounds good to me, provided that he's replacing the wiring harness along with everything else that would need to be replaced during the course of an 8-speed transmission rebuild. And yes, those converters are infamous for failing (class action lawsuits are pending, I believe). The extra year covers his parts costs to go through the unit again if it fails - up to you as to whether you want the additional protection. Given he could almost rebuild your transmission three times for the cost of what the dealer is wanting for one new unit, I'd be inclined to go with the independent shop.
I would ask him what gets replaced, in addition to the usual stuff like filter, frictions, bushings, paper/rubber/seals/sealing rings, solenoids, wiring harness and converter. For example, does he replace the chain drive on the pump, swap out the pump or just replace some internals (either is fine - most of my pumps don't need replacement, just reconditioning and replacement of small internal parts). Are there any other parts that typically wear and get replaced during overhaul?
Once he tells you, assuming he divulges that information, it would be your call at that point.