Here in India, Nokia does not charge anything for cleaning dust, etc if the device is covered under warranty. Also, if the device has been disassembled by the customer, the device does not loose it's warranty provided nothing has been done to the device and it has been fixed back properly. Obviously, the customer should not tell Nokia Care about all this. The don't mind working with worn out screws as the customer can tell them that it has been repaired bofore at some other Nokia Care and they assume that the same might have not been updated on their service website.

Your device is still perfect and if you use exactly the same new screws you can even get the warranty later. If nothing works out, you can even assemble the device back with new screws and submit at some different service center and complain about usb connectivity issues. In my country Nokia Cares have no method to void the warranty of a phone, they can just repair it by chargins some money but still the other service center computers will still show it to be covered under warranty. But obviously if the device shows any signs of repair or damage one might not get warranty anywhere.

If you were in my country, I would ask you to get the screws from markets where hell lot of repairing is done and there are large number of repairing stores or some hardware store which is known for selling different screws.

The entire touch screen assembly will be very expensive and will not be an efficient solution. My friends at the Nokia Care told me that to remove such screws they extract the screws by damaging the least possible parts and then replace those parts. By damaging I mean drilling,etc.

I searched on google and found some screw extractors which are meant for small sizwd screws and also users reporting sucess in extracting cell phone screws. Try googling Eazypower 82681 and is available over amazon. Try this as it might be cheap enough. If the screws somehow come out, you need not worry about the threads at all. They will still be usable enough and will hold the phone tight enough.

One more thing you could try is using a soldering iron on top of the screw to heat it up such that the screw holes melt up a bit and you can then somehow pull out the screws. Try this at the last before buying up the new touch assembly for your phone. Handle all the other components very carefully or you might end up damaging them also.

Long time back, I damaged the screw holes of my Nokia 5700. There is this adhesive called Fevicol available in India (you can google and check it out). This adhesive is usually used for sticking wood etc. I carefully filled the screw holes with fevicol and allowed it to try. The fevicol dried up into a plastic type form which was not very rigid. Later I was able to properly fix new screws in these holes.