I agree with the comment about contamination from a failure possibly being your issue. 

I can't believe they wouldn't cover the oil and filter when replacing a drive motor. That's automatic time on a kidney loop at other colors. Cat was out today doing some minor updates on the 262D, one was for the engine oil dipstick tube and if the upper bracket was broken (ours was but tube didn't unseat from pan) then they supplied a 5 gallon pail of engine oil and filter along with the labor to change the oil.  Maybe a case where the huge megadealer has better service than the small guy?

Extended warranties can be tricky, depends who is the one behind it and all of the fine print.  Since your's runs out soon make sure you have complaints documented with the service department. However it sounds like the service write is the issue in this case so that really wont help you, time to escalate the problem around the service advisor. Get ahold of Gehl and find the territory rep if you can.  

I'm not sure why it shouldn't be able to run at or near idle, lots of machines do this daily.