Yes, $500 does seem high. I was prepared to write this MBA off and put the money I would have spent to repair it towards one of the new MacBooks or MacBook Pros. But I'm hearing so many complaints/issues with the keyboards on the new models that I want to get another two or three years out of this Air, while Apple sort out these problems in the new form factor.
I also checked out the used and refurbished market for MBAs. I think mine is in better shape than most of what I am seeing on eBay, and the refurbished models Apple sells are not marked down by much (still $1200 for top of the line).
Also, for $500, Apple replaced my logic board, display, RAM, and apparently the SSD. It seems like the only thing that's original is the aluminum shell and keyboard/trackpad. It's essentially all brand new internals. iFixit wanted $480 just for a new logic board, and I would have had to replace it myself.
I think Apple's rates and service are worth the price.
Thanks all!