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I tell my customers to strip it off, there's no good reason to go over it.
If you do go over it then you have to pad out all of the window and door casings, more work means more money, now and in the future.
The price you were quoted seems reasonable ( though I don't know the size of you're house) enough so why not strip it and spend the $1400.00 and save the headaches you'll run into later doing all the padding.
I'm assuming you have brick mould for your casings on the windows now and if so then I can tell you this, that type of moulding cannot be padded too easily, not without removing if first.
By removing the moulding, any moulding, first you chance cracking it, then you have twice as many nail holes to fill when you put it back.
If it was me ... I'd strip the siding, replace all the moulding that needed to be replaced, and then apply the siding.
One other question not mentioned, I understand your installing siding but are you covering the existing casings with vinyl too or are they staying exposed?
Just remember this ... you get what you pay for.
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