Were the demands of Dorosin

justified at any stage?

 Yes Dorosin demand were justified to particular stage i.e the
second time he called and asked Replace his machine (the
Vapore) which had just broken for the second time, Send his
friend, the bride, a letter of apology, and the $495 machine to
his friend, and the matter would be resolved.
 This was still reasonable as Mr.Dorosin has wasted enough
time and travelling expense to the store and called repeatedly
to get his complaint resolved. Had he taken up the matter to
the court the company could have been fined heavily.

After this he demanded a $2495 maching and a letter of
apology to his friend. This was above the expected demands
and it seems that Mr.Dorosin only got personal afterwards.
 How can now he be
handled to save the company,
money and reputation?

To save the company, money and reputation, Mr.Reese can do
the following :

Write a sincere letter of apology to his friend Ms.Cohen and
give a replacement Estro 410 to her and the free coffee.

Get her interviewed of what she recieved and publish that in the
newspaper

Write a sincere letter of apology in the newspaper and admitting
their mistake and at the same time telling that $2,495.00
replacement machine was not a reasonable solution

As a fine, they should offer to provide Mr.Dorosin also with free
coffee and a nominal fee which is reasonable and get that offer
published in the newspaper