UPDATE
Following my previous rant, and discussions with people at the warranty repair place and the manager of the local store, Dick Smith Electronics did eventually agree to replace my Elonex e-Reader.
To achieve this outcome, I had to point out to them that many, many people with e-Ink devices of various brands have had similar problems, and that breakage during normal usage is specifically covered under warranty clauses in the Trade Practices Act. After confirming with the store (where the device had been returned to) that there was no sign of external damage to the device - only the e-ink membrane was damaged, they agreed to replace it.
Interestingly, while the repairer and warranty people I spoke to on the phone repeatedly argued that the damage to the device could only come from unusual shock or mistreatment, the store manager I spoke to when picking up the replacement said something along the lines of "these things will break if you put a bit too much pressure on it when you pick it up, if you lean on it when it is in a bag next to you on a chair, if you shake it a little bit. They are exceedingly fragile". (I can't guarantee that is exactly what he said, but that was it, more or less).
Therefore, assuming you don't drop your eReader (in which case I'd agree it's your own fault - bad luck)...if it breaks for no apparent reason during everyday use, you ARE legally covered under warranty. After all, if these things are so infinitely fragile, you would think the manufacturer would (a) provide warnings to that effect in the package you purchase, and (b) provide a suitable cover or carry bag with the device.
Nevertheless, now that I know how delicate these things are, I have ordered a padded leather case for it and won't be taking it out of the house again until the case arrives!
Thankyou to the people at DSE who did manage to see the light and come to my aid on this matter.
