One other thing popped into my head while browsing the selection of hardwoods at the yard - some of the pieces were separating or fraying in sections. I don't know the technical term for it, but I would imagine it is caused by uneven drying and having two halves of the wood crook in different directions. Basically the edges of the wood are fine, its the middle that has split apart.
So let's say you have 1 foot of that on an 8 foot board - would you attempt to talk them out of making you pay for that 1 foot of useless wood Here's a pic of what I mean -