What I see is the issue is the fading of the pictures. This is probably caused because of either not taking care when laundering the quilt or the quilt has been exposed to the sun. When you repair and return the quilt, you might want to include information about how to care for the quilt.
I agree that you should just put the new picture over the old -- I put an new fabric block on top of a damaged block on a quilt my grandmother made and it turned out fine. If the young man wants it restored he wants it to have the same feel as the original condition of the quilt.
If you want to try to print the photos yourself, it is not hard. I print photos for my quilts frequently -- and have done so for over 15 years (back when only June Tailor had the fabric to print on). I use a good, commercially prepared fabric made for Ink Jet Printers that I get from an LQS and print using my ink jet printer (I prefer Printed Treasures, but have also used the Electric Quilt Company Ink Jet fabric sheets). The only quilt that has faded is one we took to car shows and exposed to the sun for 6 years.