> The main problem I see is that they would likely also have to pay for the entire development of the new upper stage
I don't see why they'd need to do a full 2nd stage.
I'm sure a limited run fairing (especially a complicated one like a hammerhead) will be expensive - certainly quite a bit more than the $5 million per unit cost of the Falcon fairings. But ultimately a fairing just isn't that complicated, and SpaceX has a lot of experience with them.
Well, the aerodynamics are different and the launch abort system would probably have to be somewhat different too. The structural integrity could also be quite different. Of course it won't be a completely new upper stage, as it is just a modification, but a few test launches are probably required.
I don't see why they'd need to do a full 2nd stage.
I'm sure a limited run fairing (especially a complicated one like a hammerhead) will be expensive - certainly quite a bit more than the $5 million per unit cost of the Falcon fairings. But ultimately a fairing just isn't that complicated, and SpaceX has a lot of experience with them.