I've recently RMA'd a couple drives with Seagate that were not dead, but had a number of reallocated sectors. I confirmed with a Seagate rep before RMAing that this was sufficient cause for it to be replaced under warranty. As mentioned above, I've gotten the impression that while they reserve the right to return your fully functioning drive and charge you for all the shipping, in actuality they seem to take anything you send in.
Edit: And I received two refurbished drives from Seagate for the two I RMA'd. They definitely aren't new, but oh well, they are in better shape than my returned ones.