I'm a little reluctant to take the side of the dealers, but you know they certainly should not pay for a motor (or any other major part) that has been abused. On the other hand, they have an obligation to fix things that legitimately failed. The big problem is how do you tell the difference? The answer in a lot of cases is ....you can't. Even if they did have a magic black box that recorded what color socks you had on at the strip last weekend.
Probably the best way to go is to be straight with your dealer in the belief that there is at least a 50-50 chance that he will be straight with you. If your stereo is broken and you have a CAI. The dealer should of course fix the stereo. If you're asking him to replace a torn K&N filter in the CAI, no dice. But, how about if you've got no mods and you put a connecting rod through the block....no man's land for you and the dealer. Maybe you abused it, maybe not. I wouldn't want to be in the dealer's shoes for that one because as svttech76 says, the dealer may have to hock those shoes if he puts in a new engine.