There's a real issue with the one and only phone that's set up with an eSIM as well dying randomly. This stuff works up to the point where it doesn't, and then you're hosed.
The simple truth is that no matter how many thousand bucks you spent on that iPhone, Apple won't just give you a brand new one on the spot. It is fair to give the manufacturer at least a single attempt to fix it, and it's fair to expect it to take a couple days. Unless they return the phone to you still broken next week, I don't see much you can complain about.
The express replacement online would have been the best way, and the store employees really could have informed you about it. At least they gave you a loaner phone. You aren't required to restore the backup, you can set it up as a new phone, and when you get the 14 back you can restore it, and then resume syncing with your watch. You won't lose any data.
If you absolutely cannot be without a phone for more than a few hours and then you lose your health data by setting up the watch before restoring the backup - well, then that's not on Apple really, they never promised you to replace your phone in an instant to begin with. I have an older phone in a drawer that I can use for such emergencies.
A family friend had their Android phone break, the manufacturer never replied to the support request, the place they bought it from initiated the warranty repair and told them it will take a couple weeks. After a few months and repeated complaints the store finally admitted they lost the phone, refunded 50% of the initial purchase cost and refused anything beyond that. Never got a loaner phone to begin with, I gave them my old phone.
From my personal experience both with Macbooks and iPhones, Apple has pretty much the best and quickest support even beating some "business next day" warranties. For iPad, Watch and iPhone you have to be aware that you need to request the express replacement online, when you have AC+.