There's nothing in what you quoted that says you get free upgrades under AppleCare+, much less unlimited ones.
Sure it does:
New Model
3.1
(b) exchange the Covered iPad with a replacement product that is new or
equivalent to new in performance and reliability, and is at least
(MEANING CAN FUNCTION BETTER, newer product) functionally equivalent to the original
product. If Apple exchanges the Covered iPad, the original product becomes Apple’s property and the
replacement product is your property, with coverage for the remaining period of the Plan.
ADH costs $49, limit of (2) damage claims because YOU DROPPPED / BROKE IT!
3.2
If during the Plan Term you submit a valid claim notifying Apple that the Covered iPad has failed due to
accidental damage from handling (“ADH”)
(YOU DROPPED/BROKE IT), Apple will subject to the service fee described below either (i)
repair the defect using new or refurbished parts that are equivalent to new in performance and
reliability, or (ii) exchange the Covered iPad with a replacement product that is new or equivalent to new
in performance and reliability, and is at least functionally equivalent to the original product (both
individually known as a “Service Event”). ADH coverage will expire and all of Apple’s obligations to
you under this section 3.2 will be fulfilled in its entirety before the end of the Plan Term when
Apple, as a result of ADH claims, has provided to you two (2) Service Events
(MEANING IF YOU DID NOT DROP/BREAK IT AT LEAST TWICE, YOU CAN REPLACE IT AGAIN UNTIL YOU ARE HAPPY, AT NO ADDITIONAL COST).
I can swap out as many times as necessary, until they get tired of handing me iPad 3rd gens (defective because it gets hot if left at full brightness, sluggish in full Retna Games, etc). Defects that have been fixed with the iPad 4th gens; otherwise, why still sell 2nd Gen and drop the 3rd Gen if the 3rd Gen is not defective?