Hi Life-Man
Well I guess we agree that ANY movement in the rear brake rotor is dangerous and can cause Vibrations, Braking Issues, Severe mechanical damage in your wheel's system, Uneven Brake Pad Or Rotor Wear, ABS Failure, Grinding and Strange Noises. It can cause tire wear, fire and possible axle damage and replacement!
What I don't understand is a mechanic that says he does not know how to repair your Nitro? It has been my experience that If a mechanic says this or wants 1K to start repair, he does NOT want to repair your vehicle and to find another Repair Shop!
It is very clear that if you search "Online" US built Nitros have a high rate of wheel bearing failures. Your mechanic should have told you "Looks like we need to start with replacing that wheel bearing". Your issue is solved maybe 90% of the time with this repair! Sure there can be other causes like needing to replace the axle too, that maybe caused because of a wheel bearing. (see below)
I don't know how many miles your Nitro has on it but the bearing replacement of BOTH side rear bearings might be in order if you if you plan to keep your Nitro and should be an investment in it at long term lower costs.
Good Luck and let us know how it all works out.
Nitro 2.8 crd 4x4 U.K. spec (rear axle)