Me and my friend bought Euro-II from the same dealer, and we were told the same thing!
If a problem with engine(not a small easy fix-able one) they will replace with a brand new engine... 
Once my ODO wire broke, i went to get it claimed under warranty, and i got refused. The rubber seal under the cluster was broken, and i had to pay for it:/ so i find it hard to believe they will get you a brand new bike, they are more likely just gonna repair it!
I abused, raped and molested my bike to the max, first gear until the rev limiter kicks in etc. and now it has another owner:P
Chaska achieved, time to get Suzuki gs-150:D