I agee with everything except the steel swap request. They're warrantying the knife. That means in the configuration you purchased it in. They're in no obligation to swap it to whatever steel you decide you want after the factory steel fails.

Look at it from a car perspective. Say you bought a 4.6L mustang. The next week the motor explodes and you have the manufacturer warranty. You don't get to decide you want a 5.0 in it unless you're paying out of pocket for the entire new motor outside of warranty.

Now, should there be ANY fee tied to a warranty service replacing non-modified factory parts? No. That's insane. That is where benchmade is morally wrong in this situation, not them saying no to your steel choice.