I would definitely use another vet. It's in your best interest I would say. I would be rather pissed off about the knee problem. It's disgusting how shady people can be whether they are breeders or brokers. Sad that things have come down to the all mighty dollar. At least you are aware of things early enough so you can get him help and prepare yourself for whatever is to come.
I totally hear you loud and clear about not giving him back. Four years ago I bought a Ch sired Shih Tzu and ran into some issues that became evident after a month and the breeder wanted to point the finger and say that my kids had hurt the dog. Meanwhile when I got him to the best Ortho Surgeon and he had his surgery it turned out that the pup had previously had surgery to correct the situation...so she felt rather stupid there. Thankfully my surgeon was smart enough that when he went in and saw the previous attempts at correction he had pictures taken so I could use them to do what had to be done. Let me tell you that whole thing ended up costing me to the tune of $5500 but honestly it was worth every penny becase I helped him whereas she would have put him down. I ended up having to place him in a home without kids afterwards because he would get grumpy that he couldn't be all the doggie that he was before with the kids. He is in a great situation now and super loved and spoiled so I did good there by him...no matter what.
I think you are a great mommy and be blessed with unconditional love so that will make it worth it.
I just got my Yorkie last night and he is off to the vets today for his check up.
Hugs to you and your little one.