Yeah, I guess I'm just still nervous about the whole small dog thing, so their various health issues really concern me. The "pin hole in the intestine" comment worried me because abdominal sepsis kills so quickly. If you get this baby, definitely keep a hawk eye on her and race her to the vet's at the first sign of trouble.
Obviously Hugz has personal experience with this situation though, so I would probably go with her opinion over mine.
I still venture that a puppy with no diagnosed issues would be a "wiser" purchase, but that's a judgement call for you guys to make. Chances are, a routine surgery like that would not cause problems down the road. I would just take every precaution.
It is very good that the breeder was upfront about the issue.
She could have just as easily "forgot to mention it"...I'm sure there are many breeders that would have.