They only sold the car because it would be profitable for them, as well. Why is this logic typically only applied to warranties? Of course they're not going to sell something that is going to lose them money on average in the long run. That doesn't automatically make it a bad idea to purchase it though. The exchange could be mutually beneficial for several reasons.
For the Walrus - I would read the fine print to really see what is covered. Some extended warranties cover little beyond a few extreme drive train issues, and you'll end up having a problem with the car and then finding that the warranty doesn't cover it and that you wasted $1500. Get a list of the repairs that are and are not covered. If it's not a comprehensive warranty, then don't get it. If it is, then maybe consider it, but still probably not at that price. Their cost is likely well below that number, and if you could talk them down several hundred then it gets closer to being a good deal.