I just went through a similar experience today. I'm located in Canada. Picked up a JTV-59 at a local distributor/retailer. Had to return it due to a defective model selector knob.It was working intermittently. It was sticking and causing the guitar to go into programming mode when all I wanted to do was turn the modelling on and off. I gave it a second chance and asked for a replacement and received it today. I even asked that the next one be tested before getting delivered. I was assured that it was, however to my immense disappointment, the replacement had even more issues. The fact that the distributor didn't test it properly is another issue, but I was still really surprised with what I found.
Model selector and alt tuning knobs were mounted in reverse, easily fixed but still amazed that a guitar could leave a factory with this mistake. Secondly, the issue was now with the push button on the alternate tuning knob which was not working at all so I was unable to gain access to the all the guitar models. Then I tried connecting to my HD500 to see if it could access the models from there using the VDI connection and Variax menu on the POD and alt tuning knob was just displayed as "n/a". I tried updating firmware and that failed as well. Needless to say this one was a real lemon. The rosewood neck was also not in the best of conditions. I've read the posts about the first batch of JTV's having all kinds of problems, so I'm assuming this distributor has an old batch in stock or this could still be a production problem.
I totally agree with your statement that a $1500 ( $1600 in canada ) guitar should not arrive in this condition. Makes you feel like it's toy bought at "toys r us"! I have owned several Line 6 products and am a big fan of the modelling technology as well as all the other innovative products, however this experience has really turned me off. It's clearly a production problem and it seems that it's well known. If there is a known issue with a batch that was manufactured, shouldn't line 6 recall all those models that could potentially have these problems rather than having retailers and customers going through these types of experiences?
This one will go back but I've lost confidence and will not order another one. Very disappointing.