3/4" away from the wall is not acceptable, unless you are installing a granite backsplash or using a thick tile. Tile is typically 3/8" + adhesive. He's right, you should get a new piece, and it should be installed closer to the wall. A 1/4" gap is acceptable...sometimes you can get away with a slightly larger gap - but definitely not 3/4". Make sure the new piece is from the same slab or lot. And if the granite has movement, make sure the new piece lines up nicely with the rest of the granite. Good luck

I just went through the same thing with walls out of square leaving big gaps on the back of my counter. Depending on the thickness of your proposed tile, you should be ok. I would talk to your tile installers before going through the removal etc. I think the use of a 4" x 1/2" or more thick matching backsplash was designed to cover all these uneven areas. When we try to run the tile straight up from the counter ( which does look better) we get into trouble. You have to decide what is worth it to you. Have you chosen your tile? is it really thick or thin?. Is there something "under" where it will go for it to rest on without dropping behind the counter?

Did your installer say he would re-install the same piece or give you a new one?

What you do about it would be up to you, and how anal you want to be about it. If you really don't like the idea of the granite splash at the bottom of the tile, then by all means, demand they redo the countertops. However, I've done many backsplashes where the granite splash was installed, and it still looked good. let me put up a facebook album so you can get an idea. Some of each (with, AND without):

https://www.facebook.com/media/set/?set=a.545925585479950.1073741831.165818890157290&type=3

Thank you all for the answers. So I guess the first question is this... IF we opt to do the granite 4" backsplash and then the gap is covered, there's not a larger potential problem with water seaping between the backsplash and counter? They did offer to do this for us at no charge. HOWEVER, I think we'll still have a gap at the top where the wall bows....and the top of the granite backsplash will still have the gap.

I totally agree with the templating. He did that for the peninsula and it's perfect. I am very angry he didn't template the entire thing.

lkdrew - He wants to EITHER add the granite backsplash OR reposition the existing piece of granite... the one small piece, not the larger one that is still as much as 1/2 an inch from the wall (behind the counter). His "plan B" is to replace that small piece all together. He is not offering to do anything with the larger piece. It is 1/2 of an inch from the wall in some places, and I am uneasy with that.

PS the other problem is I know what they have in stock and I do not like the other slabs of this granite. :( So if I try to make them re-cut it I don't know what to do as far as the actual slabs.

If there is any re-install, if I were you, I would insist that it is templated.

they needed to template that. seriously.
have them rescribe the wall on some cardboard and have their fab shop grind/cut the back edge to the scribe line.

if they don't want to do that/wont do that, you can either build out the wall where the backsplash goes with some luan and add a pencil trim to the top to finish and hide the difference, or have them make you those 4" splashes.

and if you've only paid the half down and haven't paid the other half, DON'T until it's to your satisfaction.

Repositioning will only give you a lopsided reveal along the front of your cabinets. DO NOT let him do that. As for the splash, if he cuts and seams it where the bump is in the backsplash, he could follow the wall well enough that any gap will be hidden when the tile goes up. I'd still rather have the countertop template and recut. Also, I'd like to know what's going on inside that wall that it's that far out of whack.