Well here's an update.
I just got back from Audi dealer, and valve cover gasket Not covered by warranty (Huge surprise
)
So I have a call into Audi Customer Care and I got the usual line of we stand by our dealers, but I will research why exactly it was denied and get back to you. He also asked if I had contacted class counsel about this issue. I told him that I wanted to give Audi a chance to make it right before I take that path, and cause any publicity about how Audi won't honor the language in their own warranty booklet. Then I quoted to him from the warranty booklet where it says "Conflicts concerning the warranty are to be resolved in favor of the consumer". I will post any updates when I find anything out.
Just an interesting side note.
When I was looking up the repair procedure in ERWIN VW/Audi does not refer to valve covers as valve covers they refer to them as cylinder head covers. So I might be wrong, but to me it would stand to reason that the cylinder head cover is part of the cylinder head which is explicitly covered by the extended emissions warranty.