Well, I’m not sure what to say at this point. I’ve done some rescue, and lived with my mom who did a great deal of rescue, and it’s usually been (for us) getting a dog out of a shelter and into a foster home, and less of your situation.
That said, the rescue organization may be all of one woman and/or very disorganized, particularly if the breed is a rare one. So what seems odd may simply be that disorganization. Still, if you don’t feel comfortable with dealing with them then don’t. I understand that you want what’s best for the dog, and so there’s no reason to deal with people you think are sketchy.
Does Iris still know the original owner? Perhaps that person can shed some light on the situation. They can tell you if the breeder is sketchy, if the person running the rescue organization is sketchy and many other things, particularly if they’re a member of the show “group”. Note that they can tell you, not that they necessarily will, and note that sometimes there’s that pesky politics, and there may be nothing more than rumor out there to hear.
Since the dog is fixed, she won’t go to a conformation home, though they may still want to place her with a home that will put other titles on her (obediance, agility, etc). It’s also entirely possible that the rescue org is someone involved with the stud OR the bitch, and wants to be sure that the dog does get some of these titles, so that the prestige of the stud or bitch is enhanced. Who knows, maybe the rescue woman was the original breeder, and it wasn’t the coincidence of the stud, but that once she had a pedigree in her hand, she realized this was one of her puppies?
The money may sound extreme to you, and I don’t disagree that $1500 is a lot of money, but it’s still unlikely to be about making a buck. If the stud was as impressive 3 years ago as he is now (BoB in Westminster, or at the Nationals or similar), that may have just covered the stud fees. Or some of the vet bills for the puppies and bitch.
You may think I sound like I’m excusing the rescue org too much. This isn’t my intention, but I am trying to answer your questions to the best of my ability. In the end, you should avoid dealing with them if they sketch you out. I know I’ve avoided more than one person on a gut feeling, so I’m not going to criticize you for doing the same.
As a thought, you might consider also going to the breeder directly, and speaking with them. They may not even have a clue that their puppy was placed (though that would really surprise me, particularly in a rare breed), and may have some recomendations for you. They may also have a waiting list a year long for pets rather than show dogs; I’ve not seen this in my breed, but I’ve heard of it in others. In that instance, they might be able to recommend someone off the top of their head that would be a perfect match.
If Iris is still aquainted with the original owner, she may want to run the above by that person first, particularly if they’re friends. If the original owner was contractually obliged to return the puppy, and instead placed it with Iris, this could be problematic. I think that’s very doubtful, particularly in a rare breed, because it’s amazingly unlikely the breeder would not know the dog had been placed. My breed is a fairly popular one, for example, and most breeders would still know if one of their animals had been placed in a new home, particularly if it was because the animal was thought to be show quality and proved otherwise.