Well i called AppleCare, and they said that the replacement machines are not selected based on the initial price I paid for it, but based on the configuration of the computer i have.
so as per that rule, the lady said the lowend MBP is an acceptable replacement because it has the following upgrades compared to my old laptop:
faster processor
bigger hard drive
better battery (lithium polymer which apparently is better than what I have)
larger RAM
Built in SD card slot
She also mentioned that the video RAM for the replacement machine is 256MB, which is equal to what my old computer has.
She said that she cannot upgrade me to the $1999 machine, even if I pay the $300 difference.
Finally after not getting anywhere, she suggested that if I do not want this replacement machine, I can send my old in and they will repair it for free.
damn I am at loss as to what to do!