
1. Of course the KC is sitting on the fence. No surprise there.
2. What you do would depend on how much you feel you need to get the puppy out of there.
3. If he has endorsements, and the buyer knew about this (in writing and including no lifting until 12 months and tested) then even if he is allowed to be used at stud sooner rather than later, any puppies he sires cannot be registered with the KC in any case. I'd suggest that would make him less than attractive to any other breeder, at stud.
4. Stick to your guns re lifting the endorsement. DO NOT!!
5. Again if it is important to you that you get this puppy back, asap, then you may have to pay her to get her off your back and the puppy back safely. For the original price of the puppy ONLY. Expenses?? So let her sue you for that. I doubt she'd win.
After a very sad, heartbreaking, experience I had with a fellow-breeder, and I was stupid in letting 2 of the 4 survivors in that litter, go to her with no endorsements because I trusted her, I'd NEVER sell to another breeder, ever. What happened to those two was they both went out of the country to yet another breeder - no non breeding or not for export endorsements so I have to swallow what happened. Lesson learnt, the hard way.
"... but of course they won't remove correctly placed endorsements so won't register any pups from an endorsed dog."
Boy I so hope this doesn't happen but I've known of occasions where they will remove endorsements - one presumes because the endorsements weren't correctly placed!