Well, it has been over a year since the purchase and Mom's iMac is still giving me problems. I was able to fix the previous kernel panic issues by wiping the system and completing a full reinstall. Now the optical drive seems to be dead, makes loud clunking noises and won't boot a disk. Worse yet we totally planned having her extend Apple Care but both of us forgot about it and now it's one month expired over the first year of the original warranty. Grrrr! I'm not too happy considering how much easier having a Mac was suppose to be for her. Now she has a year old $1400 dollar machine that's probably going to be several hundred $$$ to get repaired! Don't mind me just needed to vent a little!
You definitely want to explain the situation to someone at your local Apple store or over the phone to one of their support reps. Ask to speak to supervisor if necessary.
It is not unheard of for Apple to fix something out of warranty.