I have not heard of Sightron having any problems with this scope. Perhaps Koshkin (he has some first hand knowledge of Sightron scopes and he highly recommends them) will chime in and shed more light the scopes performance.
I know that many people who have tried the Sightron SII are very happy with the results. As far as illuminated recticles, I think they are neat but they are no subsitute for good glass. The Sightron SII has pretty good glass so in technically you should not even need the illuminated recticle since the glass will pull in more then enough light.
As for the warranty, that makes scense to me since the product is discontinued it will have to go back to the manufacture. Not really any different then say having an old scope that you bought fifteen years ago, you wouldnt take it back to the store it goes to the manufacture.
I think that is a pretty good buy at $197.99 although I am always a bit skeptical of some of the on-line stores. I will say this the store here on this site has very helpful staff, and a top notch service. It's my understanding that they don't carry Sightron here at this sites store :( but they do carry many other brands that you might also want to look at. The store here also has the "Sample List" which are demo models, trade in's and you can find a great bargin there.