There is nothing "wrong" with a refurbished handset, they have been returned for faults or refunds but will have had parts replaced to ensure that faults are fixed, as with any other company. This said, the early replacement devices came with all kinds of marks and scratches, unfortunately due to the manufacturing process, and I suspect that several were just "thrown back" as described. However, you should be receiving a phone that is, in terms of functionality and to the 99th percentile in terms of condition, as new.
As for getting a retail boxed model, unless you have just bought the phone and are looking to do a refund/repurchase, you won't get a retail model. The normal process is to order in a CRU unit (which takes a frankly ridiculous two weeks in store, but two days through AppleCare on the phone) if you've gone through several replacements. This is just a retail unit that they need to order in (I don't know why).