They've always taken my stuff back as long as it was unworn and unwashed. But only for store credit, never for a refund.
I don't know what they do with the pairs I send back though. Given I send them back due to incorrect manufacturing, I can't imagine they'd sell them as-is in their "stock" section. But I've never seen any jeans in that section that state the manufacturing/sizing was wrong, so where do those pairs go?