Park makes cutting tools to recut the head tube so the same type of headset can be reinstalled. Unless the bike was ridden for a long time with ruined bearings, the frame should not be damaged so bad that it can't be salvaged.

The problem is most likely caused by Trek specing a cheap headset or failure to maintain the bike.

I've owned four frames with IS standard integrated headsets since 2004 and never had a problem. I do know how to keep them properly adjusted, but it's rare to need any readjustment. Although the IS standard uses slip-in bearings, my frames have removable bearing seats that can easily be replaced.