So the short answer is I LOVE my local Apple store!
Longer version:
I first noticed that BH had cheap AppleCare when shopping for the plan for my Mini (that is being replaced by the iMac) - full review of that decision at this
link
When I made the decision to go with the iMac, I was ready to buy the 1699 model as a refurb. ON a whim, I checked the BH site and saw they had it for 1598 without any tax and free shipping. That ended up being about $70 more than the refurb after tax. So, knowing they are a trusted name in photography (I buy my stuff from them or Adorama), I bought the iMac, Applecare and Trackpad there.
Now, after calling 800-Apple and having a very lame interaction with a senior product specialist as well as calling BHPhoto who claimed to know nothing about a recall (and who have not approved or may have deleted my rating on their site trying to inform others of this), I called the manager of my local store.
Explained the situation as well as the time constraint - need to return mini in 7 days and it now has all my info on it. He offered to do a straight exchange. Just booted it up and am setting up the iMac as we speak. This one came with 10.6.7. He explained to me that as soon as the recall news hit all the affected iMacs were immediately sent back to Apple.
Guess it really does pay to just get things locally and not hunt around for the best deal.