If a product has been produced in the thousands and doesn't have a documented high fail rate, it is more than reasonable to argue that it IS "fit for purpose" on a statistical basis. If it wasn't, or there was a design flaw or widespread manufacturing defect, then there'd by definition be loads of complaints.
Fitness for purpose doesn't relate to general quality. Not in terms of the Sale of Goods Act at least. It relates to whether the goods were or merchantable quality. I.e. Were the goods of a quality one might reasonable expect to be durable and sufficient for the purpose intended (by the manufacturers definition). In the case of a catastrophic failure the wheels were clearly not fit for purpose.
That doesn't mean that the wheel design and general manufacture is at fault - that would be a whole other can of worms.
This sounds like a statistically inevitable manufacturing issue, a one-off. Accept the warranty replacement, be nice to the shop, don't burn bridges by becoming an a***hole customer that thinks he is Rumpole of the Bailey because he googled a bit of consumer law.
It might be a statistically inevitable failure. It may also be a one off. However, that doesn't mean that a customer is being a "a***hole* for wanting and expecting a business to respect his rights and comply with the law.
As for your "thinking he's Rumpole of the Bailey"? Firstly, the law is pretty clear. And pretty easy to read. Secondly, most of the advice on here has been pretty sound and accurate. Third, your view is now getting to be the one typical of businesses who hold customers and the law in contempt. The OP isn't asking for something unreasonable - certainly, he's not being a "a***hole" for wanting his statutory rights to be upheld.
Why would you give your custom to a shop that's happy to flout the law and to offer pitiful after sales?
If I had followed your advice I'd be stuck with a lemon of a car among several other things.
Your new wheels will be fine.
You missed the "probably" from that. Because it hasn't been the case with Fox 36's, Marzocchi forks and several other things where folk have been stuck with either dangerous goods or simply rubbish, poorly performing products.
The OP will probably be fine, but could be stuck with a bad product if he doesn't get a refund now. That should be his choice, without being called an "a***hole*.