I wouldnt ask for the exteded warrantee to be dropped, they are more often a bargain at any price. Usually one service call requiring a part will equal what you paid for that warrantee. In ten years, you will be making a repair at some point. (imagine your car on the road 14 hours a day for 10 years).
It sounds like #1 took the time to verify the ducts and load, and frankly there is never an excuse to oversize a furnace. I cant believe he suggests he doesnt like the unit going into high fire. That is simply absurd, ignorant justification. I might suggest that the installers dont build their price based on cost as much as you suggest, they charge what they are worth. Merely suggesting that the equipment is the same doesnt make a hill of beans difference when it comes down to performance and reliability. The sizing, and installation do that, and frankly attention to detail over guessing is worth something.