Shoot, I just spent over $3000 for my alliance extended warranty for my troublesome 330d.
Brought it to cover my ass if the sh!t hits the fan again. The reliability of BMW is really a bit of a concern for me and it really pisses people off when dealership sells this warranty to u and then turn their backs on u.
I guess it really all depends on the dealership itself. In Brisbane for example, I have heard some bad stories of motorline whereas Brisbane BMW and westside seem to be more responsible. My last service consist of a few items which was covered by extend warranty and I was never charged to diagnose the problem. Car was there for 2 weeks and I was given a loan car, didn't pay a cent.
Sorry to hear about ur experience. It is really annoying to spend your hard earned money on something that keep stuffing up.