Glad you have your shipping label and are in the process of getting your replacement.
In regards to the over torqued barrel its not something to be debugged, I have seen airweights and airlites come from the factory with cracks as severe as yours which is immediatley visible upon inspection, however, I have also seen airweights and airlites with partial fracturing that eventually will totally fracture that is not something one would notice unless specifically looked for. Although unlikely a oversized barrel could also be the culprit as the airweight barrels are steel and being threaded into an aluminum alloy frame, however the Airlite Aluminium-Scandium alloy frame exhibited the same exact frame fracture and utilizes a different barrel to frame assembly process. The "airlites" have a stainless steel barrel liner that threads into the Aluminum alloy barrel shroud as opposed to the frame and when "over torqued" cause the same fracture at the same location.
In my position I have seen more than my share of J frames and I work closely with S&W Factory Reps on a constant basis. My personal experience and the feedback directly recieved from the S&W factory is as described above.
As I stated this has been a issue S&W has known about since the no dash Airweights and Airlites where produced.
I would not hesitate to buy a Airweight or Airlite again, I had a prelock no dash 342PD with well over 1500 rounds of 135 Grain +P ammunition and no problems at all. These guns are designed for comfortable light weight carry and will last many many many years for the average person that practices regularly and as Ladder13 said are backed with a lifetime warranty.