I got an appointment yesterday on this. Sent mine back for repair. A few comments for everyones benefit:
1) He said all watches have to be sent to central depot for repair/review since they will not be carrying replacements in store for a few months. Said likely case with majority stores.
2) Standard ship out/back time is 5-7 business days. Could be faster.
3) Up to depot if its a "repair" or a replace
4) Especially early on, they need to heavily document all potential issues (likely in case there is a major hardware defect they didnt find)
5) Issues like this would be covered under initial warranty so even if you are outside your 14-day period, you can get it fixed -- especially if its same issue. Obviously you cannot return it for full refund if that is what you want to do.
I find it very hard to believe that this kind of an issue would not have been caught as all their testers (like CTB) were heavily using this for activity. And while i don't think its a problem to splash the wash or drop water in the crown area (it has been tested and to pass those certifications is very strict so while it may seem counter-intuitive, i think its a non event) if that fixes it, it would be odd to me that Apple hadn't already been exposed to this issue and figure out a better way to prevent it.
Lets see what happens when it comes back end of this week/early next week and the explanation.