So glad it worked out for ya so far BigJohn... as it does most of the time for most people. The 20 years I spent in the auto repair industry, much of them at dealerships, left me with the conviction that most warranty problems are dealership problems.
That assumes the customer is legitimately entitled to the warranty repair, of course. There are obvious cases where people come in with stuff way outside the "contract" and figger they can whine, cajole, shout or sue their way into a repair to which they are not entitled. The dealership can screw up by having incompetent people (either techs or warranty/service writer people) and thereby make the road pretty tough for the customer.
BigJohn, it sounds like you have a good dealer, putting the customer first and giving you the benefit of the doubt.
BTW, I agree with the assessment of the service manager... high revs is ONE way a rod comes loose. Another common failure is a con-rod bolt that has a flaw (or was overtorqued on assembly) and breaks. Seen more than a few of those in my 40+ years of playing with engines. I've seen casting flaws in con rods where the rod actually broke. Like a cancer, the flaw is there waiting for the moment to strike. It's often fairly obvious. In either case, the flaw is there from day one. They usually don't last 30K miles, but some do. If the engine is used easily most of the time, a little hard use or "youthful exuberance" (which any engine should be able to handle) will bring out the flaw.
It's a pretty obvious "read" on how hard the engine was working when the rod drops. If it comes loose under high revs, it's usually fairly spectacular, coming thru the block. Most thrown rods, when they come loose while the engine is under a light load or easy use (as with a flaw), they don't always, or often in my experience, come thru the block.
You can read a lot from the rod and the rod bolts too. A you can usually see the "chicken" of the broken rod bolt in the "egg" of the failure. It looks different than one that failed due to abuse and sustained high revs in a way that's hard to describe. It's often snapped cleanly ahile everything else is a twisted mess. Sometimes, of course, it's pretty hard to find the "chicken" in the midst of the carnage.
Most likely Toyota will come through. It's their general policy not to be "richards" anyway, but the recent gas pedal debacle has likely put them into a more generous mood.