Just an update:
I called Apple they refused to send another device out. Some how I was transferred to manufacturing errors or something. I have no idea how I got to this department, but the female that is working my case said she works with the highest grade iPhone techs who make the supply chain work, and design the process for building an iPhone.
She put me on hold for some 10ish minutes and said this yellow screen issue is a HUGE manufacturing defect and they ARE trying to pin down where it is coming from. Right now she is unaware if its the bonding agent or the LCD itself being bad.. I'd assume both. She said they are receiving TONS of replacements on the iPhone 4 and iPad 2.
She told the previous case worker all the information and they will not send a new one because after 2 there is a computer block apparently. I have to have a $500 hold on my CC and they will keep replacing them until I get a good one.
She mentioned the vibrator and screen are the 2 most common defects with the iPhone 4, and the screen is a huge problem with the iPad. She offered compensation, although she told me they cannot tell me what it will be until this is over.
Once it is, she said she will make sure the customer satisfaction department will do something AMAZING.
Her words: "Look at the forums online. That's enough proof we have a big problem here."
She checked every case of mine and said other agents just thought I was just trying to get a new phone, but she works in the department that just deals with manufacturing defects and these are all indeed issues that they ARE aware of and trying to figure where they are coming from to fix it.
so they finally admit there is a problem.