Let me raise a slightly different opinion.
The OP has had this pealing [sic] problem since the car was 8 months old. It is now 2 years old (give or take).

Most manufacturers have a time limit of 6 months for cosmetic issues. The OP should have raised the issue with the dealer/manufacturer right when it happened and not wait.

How does the OP drive? Does he wear rings, watches or other hard objects that might have caused this? Has he done periodic maintenance (cleaning with proper products?) or were harsh chemicals used.

I know the OP is wrapped around the axle and getting backing from folks here, but he may be blowing this out of proportion. It didn't bother him for a year or so, so a reasonable person could say that it isn't a big deal.

Me? I'd find a nice leather steering wheel at a junk yard from a and pay an indy to put it in. Less aggravation and not much more expensive than small claims (filing fee, time off etc.) and, if the manufacturer lets it go that far, will probably result in a loss for the OP.

The OP needs to be honest with himself about the causes of this failure. Did he contribute to the failure (no need for him to answer here - this is a discussion between himself and himself) and what will it really take to fix it?

If he honestly believes that he did not contribute to the failure, then he should write a certified letter to Toyota corporate (the address is in the back of his owner's manual) with just facts (miles, date in service, pictures) and a request for a replacement.

Pick your battles wisely.