I think you have a valid complaint, but it gets clouded by some of the suggestions you make, and the idea of escalating the issue until the store does what you want is a bit much. "Big Mistake" is true.

Who can say for certain the damage occurred at the store?

If a store opened, inspected, re-packaged and stocked and sold items, that product you purchased would probably cost way more than anyone would be willing to pay.

Further downthread, someone bought up a valid point. Many item returns on electronics are being handled by the manufacturer, that's something to look into.

Am I saying the store shouldn't handle it differently? No

The refund/exchange may not be possible, but did you ask if they could give you store credit?

Their website shows they seem committed to their customer satisfaction

http://www.brandsmart.com/Policies.aspx