How do I go about getting my iPhone replaced by Apple?

Why do you think Apple would give you a new phone, when there is nothing at all wrong with the one you have? Here's a hint: they won't.

The only way to get the phone unlocked by AT&T is to pay off what is owed on it... then they will be happy to do so. Until then, you will not be able to do anything at all with the phone.

The person who sold it to you is who screwed you over, not AT&T, and not Apple. You may try and contact them about the situation, but the most likely answer from them is to ignore you. If you can identify them, you can sue them in small claims for your money back, but that is going to be more hassle than it is probably worth.

Apple won't replace your phone. Sounds like someone sold you a phone that was still under purchase contract. If so, the original phone company is likely to disable the phone or report it as stolen, either of which will make it useless to you.

Here's the rub! Until the phone is paid off it's still the property of AT&T and not the person who sold it to you! As such AT&T could decide to report it as stolen at any time! Your route of recourse is the person who sold it to you, not AT&T and not apple!