I don't know what the percentage is, but the largest issue seems to be the band splitting. As I said in a previous post, MS wanted $130 to replace my Band 1 even though everything wrong with it are known issues and should all be covered by warranty. Why would I pay $130 for a replacement Band 1 when I can get a Band 2 for $175-200? And to that, why would I want to buy a product with known quality issues (Band 2) from a company unwilling to support their warranty claims on another defective product (my Band 1)? I'm not in the habit of dropping money on products that are likely to fall apart during normal use. Fool me once, shame on you. Fool me twice, shame on me.
I did look up the issue and I am not sure what is going on there. Perhaps it is just a bad batch, there's always a bad batch or two in every product during manufacture. Or perhaps people or just putting it on too tightly and it's stretching. Although during normal use I would not think that it would separate, so I'm leaning more towards the bad batch side.
I am not sure of your exact situation with the Band 1, but $130 may be appropriate for whatever was wrong with it. I would definitely go for the Band 2 though than to get the Band 1. Again I don't know your specific issue or what you marked the issue as before sending the Band 1 in, but they have never refused warranty service for anything I have sent. I don't think they are unwilling to support warranty claims, sounds more like a 1 off kind of thing to me.
And the Band 2 is most definitely not a defective product.... but to each their own. I'm not trying to convince you to buy a Band 2, that is entirely up to you. For me I have not had a problem with the band separating from the screen and I have had it since December. And if something does happen I will login into the site, request service, send the band in, and wait for them to repair it. Exactly as I did with the Band 1 and everything was honored as I would expect.