7 responses to this question with no true answer. also pls stop with the ethical issues. that is up to the person posting the question to decide. its not up to us to judge him, but to answer his question.
i have returned to costco from an online purchase. it was an air conditioner worth about $800. i paid with visa. in store returns just gave me cash. they indicate they can only process returns to amex. whether this is just the costco amex or any amex, i didnt ask. this was in late '09. this would make since since in store they don't take visa, mc, and only the costco amex.
so bottom line yes, you could do this, collect the miles and get the cash back.