When I look at the pipe that you received, I find it unacceptable as "new". Other people's opinions, though, don't mean a damned thing. The seller pulled a box off the shelf and mailed it to you without checking the contents. Not good customer service, but you are dealing with a larger retailer, and the person who pulled stock was probably under 20 years old and knows nothing about pipes or customer service. Such is life when you have customers combing the net looking for the lowest price, you must cut expenses wherever possible. Customers demand it.
I think what they offered you was fair. They gave up their profit, and then some. I would have gone for a replacement, and asked that they kindly inspect the goods before shipping, but that's me.
In short, we live in a different world now, one that is much more competitive. Many consumers are willing to accept (or, by default must accept) compromises in service and quality in order to get the lowest price.
It is why China has succeeded, and why our homes are filled with crap that doesn't work and that we don't need. Of course, this has also led to a resurgence in in high-quality, low volume craft goods. So all is not lost, but you do get what you pay for, or less.
EDIT: I am now reminded of a similar problem that I had with a Borla exhaust unit for a car that I was working on. It arrived all sealed up in a foamed-in box. Upon inspection, it was clear that something was really out of kilter. The welds were cold, the alignment was off, the finish poor. Turned out that it was a trainer unit at the factory that accidentally got packed. They made good on it. Very good. Perhaps you should contact Peterson (or did you do that already? I don't remember).
