I have to say this forum has an exceptional level of participation from a very knowledgeable community and I really appreciate everyone's input and thoughts.
A few points of clarification should hopefully close the loop here:
1) I have little to no interest in starting a lawsuit. I believe the shop owner is an honorable man who is trying to run a small business as best he can with the limitations anyone faces with employees, a broad range of all shapes and sizes of RVs that he services, and of course customers of varying levels of intelligence and social graces.
2) When the incident occurred, we were on a back road close to the summit of a fairly high hill with no services and minimal shoulder access. When we heard the groaning sounds, we stopped the vehicle to inspect the trailer and found the left wheel to be a little warm, but in 98 degree heat we dismissed this as a significant factor. We did however try disengaging the electric brake controller from the trailer temporarily and moved forward a few hundred feet but saw no corresponding change in the noise. Having reached the summit about a quarter mile later, we re-connected the e-brake for the descent and maintained a slower speed around 30 MPH to play it safe. This turned out to be a significant factor in the minimal damage we ended up sustaining, which could have been far worse at a higher speed.
3) With regard to the actual mechanics of what occurred, here is an excellent analysis that was given to me which pretty much sums up what I feel everyone who owns or works on trailers with the open hub mechanism should know:
(Begin quote)
The circlip was somehow damaged during dis assembly. These little things are made if rust prone spring steel. Sometimes fusing them to other parts requires a twist, bend, or whack. If damaged the piece is damaged and can fail under load with no obvious sign or warning. I suspect your original clip was reused and failed leading to your unpleasant event. It was a .18 cent part that lead to this. A good mechanic will never reuse these as they are so cheap, however usually not at hand, and a lousy trip to the hardware store is a pita!
(End quote)
4) I presented this information to the shop owner and invited him to meet, which he has agreed to do to come up with a fair resolution. The upshot from where I stand is this:
I agree with the shop owner that it is a ridiculous design to have a 10 cent clip play such an integral role in keeping the assembly intact, but since this is apparently a relatively common problem, the general consensus seems to be that it should be standard practice to replace the circlip any time the bearing set is worked on due to the crappy nature of the clip's material.
If there is a moral to this story it is for anyone who works on older axle systems to keep a supply of various sizes of circlips around to replace the old one during these types of jobs to avoid this happening to them or any of their customers who I have not doubt any reputable shop owner takes personal interest in looking out for their well-being. Not to mention their own reputation.
So that's where the adventure has brought me to date. Thanks again to everyone for your invaluable input and happy 'Streaming!