Even though yours is an extremely rare horror story from Applecare, I'd just like to post how much better Applecare is, both in general and even compared to this instance, than almost ANY other computer brand out there. For example, last week I needed a Windows laptop for work/school unfortunately. So I got a brand new one (i7, windows 8, nice overall). As soon as I got this, I ran through the seemingly endless updates. Finally, after having updated everything, I decided to update to windows 8.1 as it's free. Towards the end of an extremely long install procedure, it finally threw an exception and gave me some esoteric error code to investigate on my own... Long story short, I have spent many hours researching this online, turns out that many others have this problem and in no way can update to windows 8.1 (even with my brand new/nice laptop!). It turns out, in fact, that Microsoft doesn't even know the exact cause of this error (despite having been released for months now).
Back to the point of this post: I called Acer (the manufacturer) to see if they would help me wipe everything clean and install a fresh new copy of windows 8 to start over again. In essence, the barely comprehendible non-native English tech guy told me "no". The best he could do was bring it back to the Acer factory condition (which is not the same and a clean install after all the special drivers/bloatware they put into their hidden partition). He was perfectly fine leaving me with this problem as unsolved. Furthermore, he couldn't talk to me about other solutions to this problem because it would lead me to install/do something that Acer didn't want me to.
I'm still resolving this issue (hopefully I've found a lucky workaround since I'm a graduate student that can get free software), but the moral is that I've never had this bad of an experience with anything to do with Apple-whether is was dealing with my laptop, phone, iPad, etc...They have always stayed with me until the problem was solved (regardless of what the solution was) AND I was content.
True it is that sometimes you'll deal with incompetent Geniuses that don't help you the best way, but at least if you stick with them and keep pressing, you'll be happy in the end. In fact, from my lengthy experience with Apple, I know that I'm usually more happy after my problem is fixed than before it happened because I usually walk away from the Apple store with a new device

In any case, since you're issue was eventually resolved, I think you had a better experience with Apple than I have had with my brand new P(iece of) C(rap) that I can't even run the latest software on.
PS: I swear every other laptop manufacturer is still trying to copy the MBPro and MBAir designs. At least that means my new buggy laptop isn't as ugly as they used to be.
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One more thing: I would gladly pay $200 (or whatever you think Applecare used to cost) for anyone/company to address my any issue with my computer for 2 years. The sad thing is, no company does this in the PC world since there is so much fragmentation between hardware & software design/implementation.