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^^^Yep the Magnuson–Moss Warranty Act basically says they can not choose to not cover warrenty work if the modification you have done does not affect the warrent work needed. If they are not going to cover it they need to show proof that you modification, in this case the lowering of the vehicle, cause the headlight housing to break.
They are going to give you crap all day and hope that you walk away and not fight it. I would try to get ahold of the regional scion rep and have them come check it out. If you really want to fight it and can afford it go with an attorney. but that would be more just to screw the dealer and give them a bad name.
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