I did indeed have ADH (the warranty would be no better than AppleCare without it) and didn't even get a chance to prove anything. I logged into the site, entered my info, a description of the problem and what I did to try to correct it (restore, Apple store, etc) and the serial number. Next page to come up read (and I'm paraphrasing, I don't remember exactly what was there offhand) "Good news! Your Apple warranty is still valid. Go see them!". Yeah, already beat my head against that wall, thank you. If Apple refuses to do anything other than replace it at full cost, the phone is a total loss and needs to be replaced which, apparently, SquareTrade won't do. Seeing how an endless runaround from a couple of blowhard companies won't get you the cops in an emergency, I gave the kid my 16gb iPhone and I'm back to using my old Tilt. Honestly, I'm glad to be rid of it, it's nice to have some useful apps again, but SquareTrade flat out f**ked me over and they're not getting away with it. If they don't want to hold up their end of the bargain, I'm considering it open season on their reputation.
Oh...I might also mention that the phone doesn't show signs of serious water damage. That is, it doesn't act like it was ever in contact with liquid water such as a spill. It acts like a couple of the accessory pins are intermittently shorted since I get the "This accessory was not made for..." message and it occasionally fries itself, requiring a restore. But since the water indicators are apparently red (probably from humidity), Apple refuses to even look at it which, if you ask me, is total bullsh*t. I've sent phones in far worse condition back to HTC for repair and they've always sent them back in almost new condition.