OK folks, I got the replacement optical mouse today! Yes, it *IS* an Intellimouse Explorer 3.0 Optical, in retail packaging.
Yes, it is pretty lame that the Intellimouse 1.0, at the time the most expensive mouse on the market, is so defective it fails in two years or less. Yes, MS doesn't seem to be able to get anything right until Version 3. Yes, it is also lame that none of us were at least notified there was a problem, and offered a recall. If I didn't check AT forums, I would have never known my gf could get it replaced without a receipt, mailing the mouse back, etc. etc. And I think a lot of you (including my gf), ended up buying replacements already, or threw the broken one away.
So, I probably wouldn't recommend Microsoft mice a second time around, but to their credit, it was replaced in 3 days flat.
In conclusion, we can spend all day complaining about Microsoft, but the fact is, you have the RMA number right here, so go get your mouse problem solved and get on with life!
P.S. LuDaCriss: the broken mouse - if it is a cord issue, a little soldering should get it working. If not, take it apart and use the red LEDs to light up your case or something! 🙂