Apple should repair your iPhone under warranty if you "virginize" it (ie ziphone method). And yes, it can be unactivated. How do I know this? Go to their support pages (http://www.apple.com/support/oss/) and enter necessary info (S/N). It will probably say that your phone is unactivated but in the same sentence it will say that they still can repair it under warranty.

So people stop spreading FUD.

Let me know if you still have the iPhone. I may consider buying it from you.
Thanks