The terms of the credit are clearly stated on the credit page.
"http://www.apple.com/iphone/storecredit/"
"Customers may not redeem their store credits: (1) at any iTunes Store in the United States or elsewhere, (2) Apple Store locations outside the United States; (3) at Apple resellers; (4) for cash; (5) _*to purchase Apple Gift Cards, or,iTunes Store Gift Certificates, to give iTunes Store content as gifts, or to create iTunes Store allowances*_; or (6) as payments on Apple accounts."
So regardless of what happened before, if you were able to get around the gift card/gift certificate verbiage then great, but they fixed the loophole so no one can take advantage of that anymore.
And for the record, when I go to Baskin Robbins to buy a 'credit' they're called "Gift Certificates" ... so basically people are arguing semantics.