Dropping/breakage replacement is a totally unofficial Apple policy and seems to be dependent on the goodwill of the store concerned. Although we've had no reports of a free exchange not being offered on a 'once-only' basis, it's not a right in any sense of the word.
Mechanical and electrical failure. You couldn't expect them to cover you for dropping it!! They do this out of 'the goodness of their heart' or because they know a satisfied customer will spread the word and they'll end up with more customers that way.