From the old iPod support docs, a "charge" refers to a full charge for the device, not to each time you plug it in. So, for example, you use 1/3 of the battery, plug it in to charge it fully, you've consumed 2/3 of a charge. 300-400 charges is cumulative.
I fully expect there to be third party batteries and services to replace the battery in lieu of Apple doing it for an absurd $100. Yeah, that voids your warranty, but you won't be doing it before your warranty runs out anyway (unless you get AppleCare, in which case it should be covered, no?).
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