Well you don't bring it back to the store, you call their insurance company and they will authorize you to ship it back because it's defective(i.e. doesn't power on; graphic artifacts; controller won't respond; it has trouble reading very scratched discs; it makes loud noises; runs slowly...you get the idea) and covered under the replacement plan. They send you a prepaid shipping box and you put all the stuff in. 14 days after they receive it, they will cut you a check for the amount you paid (not including tax) that you can use to spend on anything at any Circuit City store.
So, yes, you could get a PS3/XBOX2/27"TV/4 CD players/10 corded phones using that check in 2 years. Just make sure you understand the terms (keep all original accessories, no accidental damage, etc.) and you should be fine.
I think what they will hope is that you'll forget about it or you won't be willing to go through all the trouble of sending it back.