Any mechanic shop should be able to do either test. A compression test can tell you if your piston rings are good. The leakdown test can tell you a bit more about the motor's health. If both are good you should be able to handle making a little power.
The stock LS motor should really not go over 300hp WITH a good tune. There's a lot more then just slapping on the turbo. If you are boosting then you need to replace the factory fuel pump with something like a Walbro 255lph fuel pump. The fuel injectors are also going to need to be upgraded. Something around 440cc should work assuming you are boosting the motor as-is. That's probably $300+ right there. I assume you have already upgraded your exhaust.
Then you need to worry about your ECU upgrades and tuning. A good dyno tune is going to run you $350-550 to get completely tuned. I assume this guy has not included any tuning in his price. (I assume he's not tuning it whatsoever.) A basemap is not a tune and is not sufficient.
As was mentioned, what exactly does $700 include? I know most turbo's are $700+ new. That is a fairly low price- I assume you're getting a cheap Chinese pile of crap turbo kit that sells for $600-800 on eBay. Do yourself a favor- save your $700 and wait until you have $3000 or so. Then buy a $2000 turbo kit from Go-Autoworks and then you have $1000 to find a tuner and get all the little odds and ends such as fuel upgrades done.
Turbo's aren't something you want to cheap out on.
CHEAP - FAST - RELIABLE
You can only pick two.
For future reference, please SEARCH before asking a question that has been answered a bunch of times already. We have a Forced Induction section you need to search before posting. I'm sure this question is on the front page more then once.
Please read the FAQ thread from the forced induction section before asking any more questions, thanks.
http://www.clubintegra.com/board/showthread.php?t=9553
