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I bought a used iPad for my daughter for her birthday about a year ago for about $500.

M4 chip.

Her mom's cats chewed on the corner of the screen. It won't turn on.

The cost to replace that screen: $1200.

Apparently OLED screens break completely if just a single pixel is damaged.

I don't think that's unique to OLED. There's all manner of things that could've gone wrong when breaking a corner in both LCD and OLED
Where do you find an iPad with M4 and OLED screen for $500 ?
your ex’s cat chewed on the corner of an iPad? Does the cat have some more interesting stories of destruction since it apparently likes chewing on metal/glass, a higher level of destruction setting than the standard cat.
Only Apple can properly replace these screens and pair the parts (FaceId etc), so setting the standard repair cost high enough helps push people toward Apple Care eligible new devices, handicapping the second hand market.

That has been the case basically since Apple Care existed IMHO.

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Because you gave the context clues of M4 chip and OLED screen and $1200 repair cost, this means you somehow snagged an iPad Pro 13” with the cellular modem for $500, which is way below market value.

The current version of this model of iPad purchased brand new is $1700.

In other words, this is the highest end iPad available. Any other lower spec model reduces the repair cost lower than what you were quoted.

> The cost to replace that screen: $1200.

That's Apple saying to you: omg, stop being so poor and wasting our time, just buy another one

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Her mom keeps jungle cats or something?
That happened to my MBP without OLED. Fortunately I had Applecare.
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