stick to your guns, make them do the right thing. I was fortunate, I didn't have to escalate it past one level of phone support, and the tech was the one that offered to escalate it.
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After an hour of basically waiting on hold, Parker from apple care decided to allow the exception and repair my MacBook for free. Apple care was much much easier to deal with then the apple store, I recommend that anyone else who runs into this problem call apple care first before wasting time with the "Genius" bar.