I am going with defective.
how long did you have them? Where does it start getting wet? Toe? Heel?
From my quick look, it seems that there is now a model doesn't use gore-tex as the waterproof membrane. The gore-tex one is $30 more.
10 of the 75 REI reviews say it's not water resistant.
My suggestion, (originally, would have warranty-returned them, but now that you've coated them, probably can't), is to try to identify where it's leaking. My guess is that it's a seam on the liner, where the waterproof membrane is. I'd try a liquid seam sealer on it to see if that works.
Since WP membranes have to be assembled to the shape of the shoe, they can't be one single piece, so they seal the seams to keep water out. My guess is that some part of yours' seam didn't get properly seal, or it wore out. There are plenty of reviews that indicate acceptable waterproofness, so the membrane itself is probably still good. I know it'll be hard to get into the toe area to try to fix it, but the membrane is where the failure probably is.
Coating the entire shoe in a hydrophobic barrier like never-wet probably destroys any breathability it had...