There generally is no such thing as an in-store replacement. Every watch goes to a repair facility, where I am sure they will downgrade the software, verify the button is bad, and then either fix or replace from that facility. (They make you un-pair the watch before service, which wipes it anyway) Apple Stores do not have watch inventory to just swap them like they do phones. Managers sometimes make exceptions and swap for new inventory. I have also heard some of the larger stores have some limited swap stock, but Chicago did not.
Interesting, thanks. I just wasn't sure if they'd actually service it if you were running the beta.