I just had a very similar experience with Apple warranty... On the VERY last day of my 1 year warranty (on my iPad 1), I stopped by the Apple store to point out a pea-sized "bright patch" on the screen. WHile some wouldn't have even noticed it, I use my iPad a lot and it was driving me nuts. I was afraid they wouldn't be able to see the problem or wouldn't think it was a big enough deal to replace it, but sure enough, they replaced it with a refurb unit, no questions asked, just like the above posted. It is nice to know that Apple stands behind their products so well!
I am VERY picky about scratches and imperfections, etc and I must say I cannot find a single thing wrong with my refurb iPad 1 - not a single scratch or blemish anywhere...