Well - here's an update on my saga:

The service manager returned my call today saying he talked with the Toyota rep. Basically the pads are wear and tear and not covered under warranty, even though my front pads were only at 70% while the rears were down to 5%. He stated there were more instances of TCH pad replacements near the 25,000 mile mark. Apparently Toyota has gone to metallic pads for the TCH that are grooved to minimize brake noise, but do not wear as long as the old abestos pads. I emailed "Ask Toyota" and got the same wear and tear response. They did not answer why the 70% versus 5% wear differential?

I guess this re-confirms the dealer's high profit margins are in the shop and not the showroom.