Apple has revised its policy on performing repairs for iPods and possibly iPhones that have activated Liquid Contact Indicators.
A document obtained by iGeneration indicates that Apple may still uphold your warranty even if the LCI is activated.
If a customer disputes whether an iPod with an activated LCI has been damaged by liquid contact and there are no external signs of damage from corrosion, then the iPod may still be eligible for warranty service
Back in November another internal document was leaked which also instructed representatives to inspected iPods for additional signs of liquid damage.
In April, a class action lawsuit was filed against Apple alleging that the company knowingly denies warranty service based on unreliable LCIs.
finally!!!!!!!!!!
back when i had iphone 3g i was denied service because the genius guy at apple store said that it is liquid damaged but it never happened and i disputed with him to check the internals but he refused.
it is too late now for me , as the phone is long gone, but it is a hope for frustrated customers like me