Hmmm, sounds interesting. Most of the time when we do warranty claims, we don't have to send the frame back...they just approve/deny the claim based on pics and our feedback. And if we do have to send the frame back, Trek will send us a UPS call tag so that neither us nor the customer will have to pay for shipping.
It almost sounds from what you're describing that this dealer just doesn't want to deal with the warranty claim and wants you to get the frame repaired. Odd. In the three years that we've been open, we've only had Trek deny one warranty claim...and that was due to our feedback telling them that we didn't view it as a valid warranty.
On the flipside, if you do opt to get it repaired, Calfee does do great work. We've sent a few frames to them for repair (both Trek and non-Trek) and they always turn out well. Most you can't even tell that it was repaired at all.