[chrisjp]

The dealership stated that the car may require a new engine, I thought this was a little strange to jump straight to that conclusion even before they have looked at it, makes me wonder how common this problem is.... On the flip side, they also stated that JLR may cover most of the repair costs.

From messages on this and other forums, it does seem that Jag dealerships are very quick to prescribe a new engine rather than do a lot of investigation. I guess this might be prudent given dealerships' very high labour rates, and will be of no concern to you if Jag agree to cover the whole cost of the new engine.
But if they only offer a "contribution" then it might be better to get the car properly investigated at an independent Jag specialist who have, as another poster has commented, proper mechanics rather than the "technicians" that dealerships employ. It maybe that replacement of the timing chains and tensioners is all that is required to restore the engine to health and, although this isn't a cheap job, it's a whole lot cheaper than a new engine, even with a Jag contribution.

 

[chrisjp]

Low compression on one cylinder only could, indeed, be a piston/cylinder bore problem, but equally it could be a simple valve or lifter problem. It's also difficult to understand why this is preventing the engine starting. All that low compression normally does is make the engine run a bit lumpily and cause it to be down on power
The garage saying a piston "has blown" is also not necessarily true - they cannot know this until either they've put a borascope into the cylinder via a spark plug hole and taken a look, or they've removed the cylinder head and inspected the piston - and valves.
Removing the cylinder head to take a look would be the normal method of investigating low compression on one cylinder.
It seems that Jag dealerships are very reluctant to do any actual engine work and just recommend engine replacement.
As others have said it might be good to get the engine diagnosed by an independent, but I guess you'd need to take into account the hassle of getting the car to them. I think it will depend on the contribution that Jag will make to a new engine.