Voiding the warranty would constitute damage of the phone, or so i would think. Unless they are looking at only physical damage. But, who knows what they look for once the phone is received. If Verizon gets the phone and it isn't up to snuff, they will just skip the returning to you part and go to the charge you for the cost of the damaged phone part and you will still have a new phone to pay off. Once it's traded, there's no getting it back. Is it worth the risk?
It's not about the phone being in great shape...the phone software was altered so if Verizon decided this is unacceptable then the consequences they impose are valid. You can reverse the jailbreak if I'm not mistaken so it would be smart to do that before returning it....just to be on the safe side.
Truthfully, that phone may be worth more on a swap/buy/sell/trade site than a trade in to Verizon, considering your situation.
If what your friend wants to do is upgrade his phone and he is currently off-contract, then no trade-in is required. In this case he OWNS his current phone and can do whatever he wants with it.