Graco called me back, they are sending me a new seat, should be here by Thursday, Friday at the latest. They are also sending me a shipping label through FedEx and it should be here by Monday for me to send my old seat back. She said I could keep the fabric parts if I wanted to have an extra cover.
So, I'll add pictures of the new seat, etc. when it arrives and keep you posted on the situation.
Overall it wasn't a bad experience (did take staying calm, insistent and a manager to get a deal I found acceptable), they still say I shouldn't really use the seat because of the fraying, and that they can't guarantee my child's safety, but they have no ideas for me on what I should use instead without me having to go buy a new seat myself right now...so I guess for now we'll use it unless I think Baily will still fit in the bucket, then we might put her in it for a few days and Paige in Baily's convertible.