A serial number of a product is not meant to be changed - that would defeat the point up to some extend. As long as you sent the received product back to the customer, this product has the same serial number.

One way to address this would be to introduce a quality control point to check for the returned product's condition and decide upon the outcome whether a return leading to a repair or a exchange should come up next.

This is totally clear to me. But the situation is as it is and needs a change in the SN of the returned product. No way around.

The returned product will consist of mostly the parts that were used in creating the original device - but that one major component defines the SN electronically (on which we have no say) and externally on the housing of the product.

Can you offer an alternative workflow - can I "unbuild" the device and rebuild a "new" one with a new SN? That QC point you are speaking about sounds interesting but also too black and white at the same time.

As long as the component and therefore SN swap is traceable within Odoo there should be no issues with customs and others since we have the papers to document the process.