Iphone 5c: Screen cracked, disappointed in Apple

Question

So long story short... Or as short as possible.
Im a big Apple fan, have multiple i-products and a MacBook. My daughter is following in my footsteps with her iPad and an iPhone 5C that she got for Christmas.
One of the reasons we've chosen Apple, is the impression that they give great customer service, and always go above and beyond. (Just look at all the stories online in different Apple forums with people cracking a screen on their iPad, and getting it replaced out of warranty etc.. It seems to be a fairly common occurrence, that people get a goodwill repair and/or replacement...)
Anyways, she came to visit me in Denmark from Canada, for a few weeks, and the other day another girl bumped into her in a store: Her iPhone 5c thats she's holding hits the floor, and bam! The screen has a huge crack, but its only the outer glass thats damaged, and the phone works normally despite the visual crack.
We go to the Apple store in Sweden the next day (there are none in Denmark), to hear what our options are, and the service technician who checks out the phone lets us know that the out of warranty screen replacement (fall damage) will cost us 240$, per Apple Stores policies.
Since the phone originally is from Canada however, and since the phone is under her moms contract, we tell him that we need to confer with her and see what we're going to do. The phone is still working perfectly, so waiting a couple of weeks and getting the screen replacement done in a Canadian Apple store would be significantly cheaper. The tech tells us, that this is fine, and we're welcome anytime to come back and get it done with them if we change our mind, since "we're here for you' or some schlock like that...
Two days later while at home, the phone seem to completely die on us: Screen goes black and it doesn't seem to respond in any way.
Now I've had both an HTC and a Samsung phone die on me from one minute to the next, where the whole motherboard/phone was replaced under warranty, so I know that it DOES happen that a component on the motherboard dies for some reason or another. And since the phone has been working fine for three days after the drop, its unlikely that this is related to the phone being dropped.
So back to the Apple store we go...
We get the same tech that helped us the other day, and after taking the phone out back, he comes back and tells us that they would need to replace the whole phone, and since the phone has been damaged already, we'd have to pay around $400 for the replacement. (Out of warranty replacement, despite the phone being less than 9 months old).
I point out, that this hardly seems reasonable, since despite the outer glass screen being cracked, Apple should still be responsible for the internal parts failing under warranty. (Heck, my former Samsung phone also had a crack on the screen, but that didn't stop them from replacing the motherboard...) And since he saw the phone work fine despite the cracked screen a few days earlier, he knows that it happened well after the crack appeared.
When we left three days previously, he also said that we're welcome back any time to get the screen replacement done, and didn't say anything about us voiding our warranty on the phone, by not having it fixed right then and there.
I ask him if he's positive that the whole phone needs to be replaced, instead of just a screen replacement, and what their diagnostic computer told them out back when they connected it. He said that it was completely dead, and gave an odd explanation about water damage, from water entering through the cracked screen. (Despite that they never opened the phone to check for water damage.)
Now while I'm back at home, I just found out that my Macbook&iTunes can talk to the phone just fine, and it shows up like before, despite the screen being dead. Which means that the Apple tech lied to me, and couldn't be bothered with hooking it up to a computer at all...
I got to say that I'm really disappointed in the service the Apple store showed us. No, I didn't expect to get a brand new phone thrown at us free of charge, but I did expect to get great service, or at least the same level of customer friendly service I've seen in the past when I still had my Samsung and HTC, instead of a tech who couldn't even be bothered to diagnose the second error to see whether just a screen replacement would fix it or not.
Any advice as to what to do next? Would we be better of with trying with a different Apple store, or an Apple store in Canada, or is this the new level of customer service in Apple Stores in general?
I could get the screen replaced elsewhere for around 100$, though I'm not 100% sure if it would fix the error or not. (It seems that it would, since iTunes recognises the phone just fine...) It would void the warranty, but right now my faith in that warranty isn't very high anyways.
I'd appreciate any advice, thanks!

Answer 1

If your iPod Touch, iPhone, or iPad is Broken
Apple does not fix iDevices. Instead, they exchange yours for a refurbished or new replacement depending upon the age of your device and refurbished inventories. On rare occasions when there are no longer refurbished units for your older model, they may replace it with the next newer model.
ATTN: Beginning July 2013 Apple Stores are now equipped to do screen repairs/replacements in-house on iPhone 5 and 5C. In some cases while you wait. According to Apple this is the beginning of equipping Apple Stores with the resources needed to do most repairs for iPhones, iPads, and iPod Touches that would not require major replacements. Later in the year the services may be extended as Apple Stores become equipped and staffed with the proper repair expertise. So, if you need a screen repaired or a broken screen replaced or have your stuck Home button fixed, call your local Apple Store to see if they are now doing these in-house.
You may take your device to an Apple retailer for help or you may call Customer Service and arrange to send your device to Apple:
Apple Store Customer Service at 1-800-676-2775 or visit online Help for more information.
To contact product and tech support: Contacting Apple for support and service - this includes international calling numbers.
You will find respective repair costs in the appropriate link:
iPod Service Support and Costs
iPhone Service Support and Costs
iPad Service Support and Costs
There are third-party firms that do repairs on iDevices, and there are places where you can order parts to DIY if you feel up to the task:
1. iResq or Google for others.
2. Buy and replace screen yourself: iFixit