I think the EU ruling is actually screwing the customer.
The problem is that the 2years only covers original defects not things that break. If you have a nervous tick, and press the home button a bazillion times, thats not covered. Break the screen, NOPE! Thats probably normal wear and tear and you being a spaz.
Apple care covers the normal wear and tear. I have had Apple replace a phone that stopped where the home button randomly stopped working without any questions because it was under applecare.
Now Apple can tell those in the EU to go to hell. I'm not saying they will, but I think AC gives you a bit more options.
No.
If the Home button breaks within two years of usage then it is not considered a reasonable amount of time for your product to last. This is considered as an original defect; durability, "lastability" all begins at point of purchase. Only if Apple can prove that you threw your phone down the toilet or something as such, can this original defect issue be refuted.