Yeah it was inspected to make sure no damage occurred as a result of the broken cartridges. Those were replaced (look like rings with bearings in them) he said, although he didn't know the name of the part the mechanic showed him that was all broken up. All is good with his bike, although I have to wonder what the previous owner did to the bike to even get them into that kind of condition.
My own concern was that if these type of headsets are this janky, maybe I should replace mine with a non-integrated headset. However, I have no issues with the headset on my bike right now, and you guys have allayed my fears.