See everyone... cam covers (valve covers) would have been my first guess too, but if her mechanic "looked for leaks" he'd have seen it; which is why I didn't mention anything but having oil in the plug wells, which "shouldn't" have a burning oil smell (given that the oil isn't burning; just hot). But with so many people on the same track and the general lack of trust I have in your "adverage" mechanic, I'm thinking maybe my first intiuition might not be that far off course...
Take the care to another mechanic, describe the symptoms and explain how LS's are known for bad cam cover gaskets... But for your own sake, ask around to find a good mechanic; not all are equal and just because they are a dealership doesn't mean anything!
But on this topic... I myself went to change my plugs out a couple weeks ago and found oil in the wells so I'm due a new gasket kit on both sides... Anyone know where I can get the best price on the entire kit? (only my well seals are the problem, but hell... do it all...)