We could probably argue over this one for ever!
My guess is that the AA take the view that it's normal for a car to require certain components replaced between it leaving the factory and its final journey to the scrapyard. Such component failures they therefore class as 'wear and tear'. However, at the scrapyard, some components are usually still those fitted by the factory. The failure of such components is classed as 'breakdown'.
Incidentally, while replacing a head gasket is never cheap, £1500 + VAT sounds rather pricey. My Escort (1.6 Zetec) had a head gasket failure earlier this year. I was delivering car parts around that time, so I asked several garages what they'd charge to fix it. Most of them said £600 or £700 plus VAT. But my reliable local garage did the job for £487 including VAT.