It may depend on who you have your extended warranty with, Whirlpool/Maytag, independent dealer, or whoever. So first, what does your warranty say about repairs and replacement?
I would think the first option the warranty would give you is to attempt to repair it, and offer a replacement if they couldn't.
If you purchased the extended warranty directly through Maytag, then any replacement would most likely have to be a Maytag (or possibly other Whirlpool product) of equal value, then if you want to upgrade to 586 they would ask you to pay the difference in price, and if you haggle with them you may get them to at least split the difference.
This all is exactly what happened to me a couple years ago. I bought a Maytag TL which failed within eight months. They couldn't get a tech out in this area to repair it, so they asked me to find a qualified tech myself and they would reimburse him some minimal amount. I told them I couldn't find a tech, and it was on them to make it good. So they offered me a replacement, another Maytag model of the same value because apparently the one I had had been discontinued. I asked them if I could upgrade to the "commercial" model, the 585, or whatever it was, because after the problems I had with the old one I wanted one that would hopefully last, they agreed and asked me to pay the difference. I asked if they could give me a break after all the hassle I had, and they agreed to split the cost.
The "commercial" model never showed up despite Maytag's promise that it had been shipped, and they refused to supply shipping info. After hours contacting them on the phone (at the time it literally took over an hour every time I called, and they refuse to do business via any other means like email, if you contact them any other way they tell you to call. Even the dealer couldn't get hold of them.).
After waiting some weeks and the machine never showing well past the promised time, I contacted the BBB and the MI attorney general, and then almost immediately got an answer from Whirlpool offering me a full refund.
I used the refund to go out and buy the TC5, so it worked out great for me. I intend to never buy a Whirlpool product again, despite all the wonderful plastic parts and its light weight.
From Maytag TL to TC5 Under Warranty