I have had 2 different machines replaced for free under AppleCare. A desktop Quicksilver for 3 videocard failures in a row attributed to the machine. And my 1.25 powerbook for the screen.
The 'law' is on a state by state basis.
In a consumer friendly state like CA you are far more likely to get action sooner than another state that has less protection. As for corporate policy, probably more than 4 repairs for the same problem equates a cost that a new machine sounds like a good idea. But it all depends on how its documented.
remember that over the years Apple service and Aplelcare has changed dramatically. The policies, people, services, all have undergone changes., Some good, some bad.
I would say if you have a current problem that is ongoing for three repairs, you have a good case for a replacement with today's Applecare.
Also, universities, and major lease holders have special rules for repair/exchange. In the case of several UC system campus' a machine is replaced after the second failure of same part in 12 months. For the CSU system, the lease dictates that the machine is replaced right away, however, they always manage to send back a refurb of same specs.