Thanks everyone for your comments, and I agree with your philosophy Tiger, especially as you seem to know the dealers' point of view.

I decided to do some homework so I called the Honda Care customer service line (1-800-999-5901) and dug out my warranty booklet.

The Honda Care rep was able to clear up some confusion about which "battery" we're talking about here. The battery under the hood (the 12V) is the one that is pro-rated after 3 years and is not covered by the extended warranty. However, the IMA battery (in the back seat) is fully covered for 8 years/80,000 miles by the standard warranty that comes with the car. My standard warranty booklet agrees with what Honda Care said and shows both the 8yr/80k coverage for the IMA battery (on last page) and describes the 3yr/prorated coverage for the other battery (pg 37).

The sample Honda Care contract is also consistent. If you go to the link:
http://www.jayhondacare.com/Sample_Contract.htm
and scroll down to WHAT IS NOT COVERED it says:
"...wiper blades; battery (except for the nickel-metal hydride battery in hybrid VEHICLES); cables; steering wheel; belts;...."

So buying the Honda Care extended warranty for 8 years/120,000 miles isn't really adding anything significant as far as the IMA battery is concerned. In fact it becomes irrelevant if you are in CA, CT, MA, ME, NY or VT--- my warranty booklet shows the IMA battery coverage in those states is extended to 10 yrs/150k miles.

I hope this is helpful. I got basically the same quote from Tiger's guy at GaryForceHonda as Bernardi, so it's a coin toss now as to who to go with.