Is it worth going for warranty in this case, or alternatively, even is it safe to drive it, or I should just byte it and replace all 4 tires myself (probably do it with Costco with either Michelin or Bridgestone which go on sale every month for $70 off).
At 42k miles, those tires are getting very close to the end of their lifespan. Even if you could get another 15k from them, please bear in mind that, as the tread wears, the resistance to hydroplaning decreases on a continual basis. Thus, while the tires are, technically, safe to drive on, you would be far better-off with new tires at this point.
Additionally, the pro-rating means that, after 42k miles of wear, the reduction in cost for a replacement under warranty would mean paying very close to full price for one tire, and--of course--full price for the other 3 Continentals. And, or course, then you would still have a model of tire that is...okay...but far from ideal. Remember, you CANNOT replace just one tire unless you want to cause major damage to the AWD system, so you would be paying very close to full price for 4 Continentals.
IMHO, you would be far better-off just waiting until Costco again has the Michelin Defenders on sale--more than likely in a month or so. Currently, they have Bridgestones on sale, but the Michelin Defender is an altogether superior tire.