my mcculloch chainsaw has bulged...

[Skiddah]

Motif,
I'm glad to hear that the shop is going to go good on their warranty for you.  Hopefully the outcome is what you expected.
You're right about a wave of junk goods entering the market, it's been happening for years.  Reputable brands such as John Deere, Husqvarna, etc. are releasing verisons of models for sale at big box stores that don't hold up as well as their other products.  They sometimes even make adjustments to the model number.  Model 1234 becomes the Model 1234X cheaper version.  The reason is all about keeping the lower prices and driving up their market share through sales.  It's simple economics. 
I hear what you're saying about expecting a $150 tool to hold up well, but I hate to tell you that's not going to happen with chainsaws.  It's the old saying Good _________ ain't cheap, and cheap _________ ain't good.  Fill in the blank with whatever you want, in this case a chainsaw.  There's a reason why professional loggers such as myself and others, go and spend upwards of $700 to $1000+, we want it to hold up and last.  My saying is, "If it can't take it, I don't want it."  A $150 dollar chainsaw, ignoring the lack of demanded performance, wouldn't even last me a week.  It's just not built to hold up at those prices.  A $150 chainsaw's expected owner is one who if they used it twice in a year, that would be a lot.  That's just what it's designed for in my opinion.  So that's why I've gone out and invested a small fortune in my saws.  With regular mainatainence they can take it.  In fact, if I were to take a trip to the saw shop and buy chains, files, oils, etc. and only spend $150, I'd consider that getting off light.  It's just the nature of the logging business.
I realize that you're not a professional logger, and that's okay.  Chainsaws can be valuable for anyone.  As you widen your experience with chainsaws and read the posts on this website, you'll begin to see the importance of proper care of your machine.  Learn to file your saw quickly and effectively and you'll really enhance your cutting ability.  Always use the correct mixing oils, bar and chain oil, and keep your air filter clean.  Make sure the tension on your chain is where it needs to be.  This is what professional chainsaw users do day in and day out.  Lastly, if you don't know about something, ask.  You've done the right thing posting in a forum like this one and got a lot of good information.  Your local saw shop can help you out as well, and if you can find a mentor for cutting wood, USE THEM!  Good luck with your saw.