design -
SP uses an evolutionary design process. The Mk 25 for example was little differnet than the Mk 20 it replaced, it's just that the detail changes and annual design improvements added up to justify a model number change.
The Mk 17 is basically a Mk 16 with improved seat alignment, an improved balancing system and an environmental seal.
The end result though is that the regs get incrementally better - something we expect in cars in subsrquent model years - and the improvements are usually retrofittable into older models. This approach keeps the reg fresh and current technologiclaly speaking. It also ensires that annual service kits remain available as, for exmaple, the 60's vintage Adjustabel can be upgraded to an 80's vintage4 Balanced Adjustable and both the use the smae poppet assembly as the current S600 and offer very similar performance. Form other cmpanies, you won't be able to get a 40 year old reg serviced let alone upgraded to currnet performance standards.
recalls-
Recall wise the X650 has been the only real problem. The large initial recall was due to it being pushed into production too soon to replace the disconrtinued D400 and the second small recall (about 700 units) was due to the manufacturing company changing the grind (material) used to mold the case without telling SP what they were doing.
The Mk 20 recall was recall to prevent stupid people from doing to stupid things like over torqueing parts on the reg, it was not due to a design defect.
Mk 17 tools -
The Mk 17 requires only one special tool and it costs$33.00. It's the Mk 17 socket listed on the top of this page:
http://www.scubatools.com/Scubapro.html
You could probably even torque it properly if you had suitably sized crow foot wrenches, but $33.00 is not excessive for tool cost and will basically be recovered in the labor charge on the first service it's used on.
Parts kits -
Any SP dealer can order the parts kits whether they stock the regs or not, and should as the odds are that sooner or later someone will come in with one for service whether they sold any or not. Your SP dealer can also special order a Mk 17 with any second stage you prefer and have it in the shop in about a week so he does not have to inventory them if he does not want to.
My guess is your dealer is basically trying to make more money by selling you a more expensive Mk 25. I'd let hom know you are aware that the Mk 17 tool costs $33.00 but repeat your request for a Mk 17. If he is still not willing to work with you on ordering and servicing a Mk 17, I'd avoid him entirely as if he is insistent on lying to you and or screwing you now, he'll lie and screw you more later.
And if your SP dealer is not performing or providing good service, let SP know about it. They can't fix a problem they are not aware of.