Sellers, especially if they are aware of the flaw, are responsible for disclosing it, either in narrative description or by providing photographs of the defective area.
In an online community where trust is integral part of a successful transaction, this one was a disaster.
I paid for something I did not get. Seller denied responsibility, and continues to deny what is clearly there. I have owned dozens of regular run and expensive limited edition Designer Workshop Hagen-Renakers and never seen anything like this. Nor, as a collector for 20+ years, had I ever heard of a flaw like this.
I must also admit that I had become naively trusting since I'd had so many smooth transactions. In hindsight, two things with this listing should have caught my attention and led me to ask more questions -
1) Seller says the horse is a "Specialty" piece when it's really part of the Designer's Workshop line of figurines
2) Seller provides a photograph of only one side of the horse
Due to the "huge" infrastructure that eBay and PayPal have become, they weren't very helpful to me in this complaint. PayPal was unresponsive because they do not understand collectibles and the seriousness of the flaw. Ebay's dispute process did not work, either. Basically I was left holding a beautiful but defective horse. If I were to sell this horse, I would definitely describe this flaw.
So what is a buyer to do? I paid $60, and I could "win" by forcing a chargeback via my credit card company and lose $8 in return shipping. But, I like the horse -- I requested an adjustment in price since it wasn't described fully and honestly. Before I left the negative feedback, I offered the seller the opportunity to cancel the transaction (since she had less than 37 feedbacks, a negative would really stand out). She declined, so I left negative feedback.
Update Dec 2007 (nearly two years later): Unfortunately the bad experience with the seller tainted my enjoyment of the Forever Amber. So I sold it -- after clearly showing photographs of both side of the horse and disclosing the mold flaws.
Moral of the Story: Be honest and fully transparent in transactions, and still make a profit.
Feedback doesn't tell the whole story - people are often leery of leaving negative/neutral feedback for bad transactions (For example, I've left negative feedback for non-paying bidders or sellers who don't accurately disclose, and they've left me retaliatory negative feedback).
Check out feedback history. While it can be a good indicator of the likelihood of a good transaction, there's no guarantee. New users are likely to have a good feedback record with smaller, more inexpensive items.
Question any anomalies in the sales listing. For example, in this case, seller says the horse is a "Specialty" figurine but it's really a "Designer's Workshop" figurine.
If this is a three-dimensional figurine, if there is a photograph of only one side visible, ask for more photographs, especially If this is a seller that you don't know. Ask to see photographs of all sides of an item (left, right, front, back, top).
Ask seller if there are any unusual features / flaws not visible in the photographs that aren't described in the text or visible in the photographs.
Read the description carefully. Sometimes a statement is not what it appears to be. Example:
"This is the most beautiful chestnut horse I've ever owned."
This same sentence can have more meaning and value depending on the experience of the person making the statement. For example, if I have one chestnut horse and I make the statement, it doesn't have much meaning. But if I've owned over a 1000 chestnut horses in my lifetime, than it does have meaning.
Bottom line - learn from your mistakes and move on. I've shared what happened with me and hope it is helpful to someone else.