Just to update you on the status of this issue. I did exactly as you had stated, I was able to get them to cover the cost of the part $3400, and I would pay the labor $650 plus tax. That was last week. The car has been in the shop over a week. They replaced the AC Compressor and the new unit also quit. They are supposedly on the phone with Toyota diagnosing the problem. They actually had to get another 2007 Camry Hybrid off the used car lot so they could check wiring and voltages I guess. I am about to call the Customer Care line so at least this issue gets reported to Toyota and might help expedite the repair. they told me it may be in the Hybrid compnents and then the cost would be covered.
Thanks for your help on this.
Latest update, I was just called by the dealer and I was told it is the Hybrid Inverter that is causing the problem. So at this point everything will be covered under the Hybrid warranty. They have one on order it should be there tomorrow and installed by Thursday or possibly Friday. I do not know the cost of the inverter but it must be pretty pricey. I am concerned that the bad inverter took out the new AC Compressor that they put in but they tell me that it just shutdown to avoid damage. Hey worse case is they need to put in another AC Compressor. Thanks again for your help on this issue.