This system could save Apple a lot of money. However, there is a tradeoff: the perceived quality of Apple's customer service will take a hit.

One of the reasons Costco became really popular was their return policy. You were able to return any consumer electronics device without any questions asked. If word spreads that Apple refused to accept faulty devices, they'll end up pissing off their existing customers and scaring away new customers, even if the fault was due to abuse.

Another issue: will they count jailbreaking as "abuse"? What about using an unofficial app store like Cydia? (http://news.ycombinator.com/item?id=746198)