Follow your heart, it sound like you have loved the little fella from the moment he was born. Take him to the Vet and get him checked out. Tell your breeder that you are keeping him and are going to get him well again, and that YOU WANT A REFUND to PAY THE VET BILLS.
There are Puppy Lemon Laws, I don't know what they are in your state, but I am sure that you are entitled to keep your pup and be refund either in full or at least partial.
I hate to say this, but this breeder sounds awful and if you return the pup, he may either PTS or let him suffer
(sad)
Keep us posted
