Today I replaced my "stretched chain". The chain actually does not stretch, but each link pivot point wears into an oblong shape. The grit that gets captured in the oil is what causes the wear.I was surprised that this happened so quickly at 609.4 miles, but I guess mountain biking is harder on the equipment.
The picture on the left shows the worn chain with my Nashbar chain gauge. When the gauge can be slid in place, the stretch is 1% and a replacement is recommended.

This picture shows the new chain. The gauge cannot fit in the link and therefore is not 1% stretched.
You want to replace the chain at this point because if you don't the cassette and even chain rings would then wear to accommodate the stretched chain. This chain is only $15, so it is not that expensive. The new chain comes with a quick link, so it is easier to remove for degreasing.
If you replace the chain and the cassette or chainring are worn, then you will have trouble shifting.

I lined the chain up and you can see that the bottom old chain is about a half a link longer over the length of the chain. The amount of wear is amazing.









































