It's a well known problem with Blazers.
Here's a link to a post I put up last year to replace the sensor.
You'll have to remove the fuel tank to do it. Cost for the sensor can be less than $100.00 depending on where you buy it. The Dealer is probably quoting you a new fuel pump assembly - not the level sensor only.
You can get the pump assembly for around $300.00 at any parts store.
Good luck
http://www.automotiveforums.com/vbul...l+level+sensor
You may want to search for other topics within this site for "fuel pump assembly"