Find My iPhone killed by "wipe" - rock and a hard place :-(

Here is a little story that did not end well, but maybe I am not understanding how Find My iPhone works. If I'm not, please let me know.
Last week my wife lost her iPhone and so we went through these steps:-
1. Used Find My iPhone to locate it - but it was switched off or out of range
2. Sent an alert to the phone requesting the finder call my iPhone's number
3. Waited for something to happen, checking Find My iPhone periodically, but it was not located
So here is the tough choice. "Wipe" the phone and destroy the "Find My iPhone" capability OR don't wipe it and maybe expose the data in the phone to unauthorized access. Not much of a choice.
So we decided to "wipe" the data off the iPhone, assuming that AT&T would still be able to locate the phone by its unique ID.
About 24 hours later, MobileMe sent my wife an email to advise that the "wipe was successful".
So somebody turned the phone on. We will never know if that "somebody" was willing to return the phone or planned to keep it, because "wipe" ensured that we could no longer communicate with the finder of the iPhone and we could no longer locate it.
On top of that AT&T told us that they could not use the iPhone's unique ID to help recover it, and that if someone decided to put another SIM card into the phone, then my wife's iPhone was theirs, and AT&T could/would do nothing to stop them.
What's wrong with this picture? Quite a lot, if you think it through!!
Is there anything we could have done better or could do now to get this iPhone back?

The answer to both questions is no, unfortunately.
If someone "finds" an iPhone, all they need to do is wipe it and the true owner cannot use Find my iPhone any more.
Cell phone companies won't track down a missing phone, or help in finding it unless directed so by law enforcement.
Bottom line is that we all have to be more careful of our valuables, in this case the iPhone.

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Find My iPhone killed by "wipe" - rock and a hard place :-(

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