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The dealer is the only one who can program and cut a new smartkey for you. You can buy a replacement smartkey online (ebay), but once the key is cut it can not be recut. You'll also have to take it to the dealer to program.
If you can find a NEW smartkey online, the dealer can reprogram it for you. (Just be careful to match it to your existing smartkey, as the Avalon uses a different fob than other Toyota models.
The $350 the dealer wants actually doesn't sound all that expensive (relatively speaking). I've seen dealers who charge $400-500 for that service. I would call the other dealers around and see if they'll beat the other dealer's prices. Go with the lowest bid.
Again, you can pick up a used one on ebay, but usually the key will already be cut, so you'll lose the use of the physical key. Most dealers will program a used key from the internet for $80-100.
Good Luck!
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2007 Camry Hybrid
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