Fluffy, your pal Elsie is a backyard breeder, I don’t know why you mention her on multiple threads with different scenarios, but none of them are good ones...
QOD...neither of the breeders you mentioned is an ideal one...there’s no good reason to be breeding a non KC registered dog if it’s an eligible breed, KC registration is only withheld for major issues, extreme inbreeding, overbreeding a bitch.., nothing good and the GSD came from a puppy farm, puppy farmers do use KC registration for eligible dogs, there isn’t a KC equivalent of a puppy farm - it’s just a puppy farm.
If you think of dogs as cars... if you’re buying a car you know you have a choice between a reputable dealer with all the proper paperwork or someone selling stolen cars or worse, but there’s also a whole lot of options in between and you choose where your line is as acceptable.
The difference is that unlike with cars, money won’t need to be part of your decision because actually the worse the breeder the more they tend to charge.
So it’s nowhere near as simple as puppy farm and anybody else is a good breeder, and yes, as wolfie says you’re safest assuming everyone is dodgy and only accepting them as not after they’ve proved they’re not.