Water damaged iPod touch success story... kinda.

So my 32 GB iPod touch 4G got wet recently. It powered off during the incident and 3 hours later, I rushed home to submerge it in an air-tight bag of rice. All of this was on a Saturday.
3 days later, Tuesday, I opened up the bag and plugged it in, and it started charging fine. Once it charged long enough to go to the lock screen, the front facing camera started fogging up, and it was a pain getting it to slide across to unlock the thing. After many failed attempts, I finally got it, and noticed the backlight was going crazy. It was flickering from low to high brighness like a strobe light, so I cut it off and placed it back in the bag for another day then opened it up Wednesday with the same results.
I eventually left it in the bag for a full 2 weeks then opened it up, and it worked like new. No problems.
Over the next couple days I noticed the battery wasn't holding up, but later saw that I'd charge it fully, then after not using it for 30 minutes or so, it would shut off completely and the only way to bring it back was to plug it to a computer. It would show the "dead battery" screen for a few minutes, then going to the lock screen it'd have a full battery.
Now when I plug it in all I see is the "dead battery" screen then the apple logo back and forth. The lock screen never comes up.
I found sites where I can replace the battery myself but I'm not sure if it's the battery anymore. And if it were a problem with anything else would sending it in to Apple solve it. I've heard all they do is replace the battery and back cover.
Thanks for your replies in advance.

Apple will exchange your iPod for a refurbished one for:
Apple - Support - iPod - Repair pricing
The can tell by liquid indicators that the iPod was wetted. It appears that the water damaged some parts and it may be more that the battery.

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