Sebastian was charming and the employees were impressed with his blog (thanks Posterous!).
We managed to go from :
'Bummer, your iphone is broken and out of warranty,it will cost you $399 to get a new one'
to
'One of the genius bar support people may be able to get you a new phone for $199'
to
'Here's your new phone for free, sorry it was broken. This new phone has a warranty. Let us know if you have any additional problems, and we'll hassle ATT for you'.