Apart from the if's and but's with regards to this pup's hernia for breeding purposes, the breeder just has the most horendous attitude I've ever heard of. She
should have mentioned the hernia what kind of breeder does not point out anything medical at the time whether serious or not.
And to not even contemplate wanting her pup back, when the new owner clearly is not happy is a terrible attitude, she obviously does not care for her pups only the money they bring.
As far as I am concerned with regards to hernia's it is not really until a pup is much older that a vet can really tell how serious or not it is going to be, the new owner needs to know either way, it was deceptive of her.
The deafness is a strange one, you must have a very thorough vet, I take my pups for first vaccination and they get a thorough examination from thermometer up the bottom

- full bodily examination eyes ear checks etc. but I have never had a 8 week pup checked for deafness in any way shape or form, is this a new examination??? I wonder why your vet checks this at such a young age, as already stated I would not take clapping hands and banging as a proper deafness test. The pups mind could have been elsewhere at the time, checking out her surroundings and disinterested in the clapping etc.
I think Isabel is right, you can't have the pup and money returned too, it would have to be one or the other. As the pup is so young and if you are not happy with her you can pursue a moneytary refund with the fact that you have been sold a pup deceptively on the breeding grounds. (Of course this would have to be proven) But then you would have to return the pup.
If you want a pup to breed from, don't keep her any longer, (try not to be ruled by your heart) personally I would find her a new
pet home yourself and take a loss in the money rather than return to this breeder. Phone her once more and
tape her saying she does not want the pup back, take her to court for the difference that way you have proof that returning the pup was not an option and you can re-coup any money lost, and perhaps a good solicitor will get some kind of compensation for all you have been through too.
Then look for a good breeder, (champdogs comes to mind ;-) ) and get a pup that you can use to breed from.
If your happy to keep this pup as a pet then just let it go, and learn to check any future pups for hernias etc on collection as you have found to your peril there are unscrupulous breeders out there. :-(