To be honest, there isn't really all that much either the KC or the breed clubs can do (particularly if breeder is not a member of the individual breed clubs, not all are). The assured breeder you speak of, there is at least some redress and I hope the owners have ensured that they have fed back to the KC. As above, no shame in getting surprise issues, the shame is in not supporting buyers and in your horrendous example above, repeating it.
I never deny that there are bad breeders around, as there are good and bad in all walks of life - but in fairness this breeder is not necessarily appearing to be one, and I suppose I am a positive person who gives the benefit of the doubt. If the breeder were denying and not wanting to support, I would be right with you and baying for their blood, but don't discount that the breeder may be equally distraught (and also worried about the rest of the litter and possibly years of their own breeding line).
Re. whether the breeder lied, I've known breeders have their pups health checked with a clean bill of health and then have problems identified when buyer goes to their vet. It happens - pup can be under stress and things are more noticeable. This is why any reputable breeder will ask their buyers to have a vet check soon after getting the pup.
In the case of the reproductive organs of this pup, in fairness I think that is so rare that no-one is likely to routinely check for it.
Anyway - suppose none of this is helping GoalieMum really. Hope you have managed to sort a difficult situation, GM. x