i haven't read all the posts... but
yup, this is what macmall does. when this happened to me, i went through the headache of contacting them by phone and complaining (i'm terrible at being demanding...) as calmly as i could. the fact is, at least when i had the problem, the website shows you a preview image of the engraving on the product. and it shows it in a much different font/quality than what you end up getting. now of course it may not match exactly, but when the font is completely different, that's false advertising.
i would call them and complain. ask to speak to higher ups, etc. in my case, i'd ordered from macmall before and been happy. i pointed out i wouldn't order from them again and would encourage all my mac friends to follow suit. obviously the people you speak to aren't to blame, so remember that. but it's a scam, as far as i'm concerned, and you have every right to call them on it. the tough thing is i did it for a couple hundred dollar nano. an ipad is a bigger chunk of change. if you have a lawyer relative/friend, a simple email from them could scare some sense into them. again, this is still assuming they falsely portray the look on their site like they had been back when i ordered years ago
also, this thread isn't about the value of engraving in general, so give that a rest.