Subjects with no definite answer always arouse such passions. Like any debatable, controversial subject, it pretty much comes down to the individual person's beliefs, ethics, life experiences, and knowledge.
The more educated and experienced you are, I think you will find you "raise the bar" on your own expectations of a breeding animal.
A person who is ignorant, naive, or new will not have the same goals as someone who has been in the breed a long time and is competitive enough to hold their horses against others at the National (or worldwide) level. Once you start appreciating a TRUE well-bred animal, the less likely you will probably condone breeding pet-quality or unregistered animals. I think that's just the basic facts of life as I see it.
My personal feeling is that a breeder should find the BEST horses they can afford.
I cannot afford super-expensive horses, that are probably worth the price tag, and much higher quality than the horses I have. I have to be patient and find those diamonds in the rough that are good prices. I value a good horse.
Here is an excerpt from my article on my website on the subject
Breeding animals is an art form. Not only must the breeder be able to carefully evaluate the mare and stallion and resist "barn blindness" but they must also be aware of genetics and pedigree. The attempt is made to improve on both parents... but to begin with, both parents must be excellent examples of their breed. You can improve upon a pet-quality animal, but it is less likely the offspring will be an exemplary example of the breed. It is common that many breeders think they can just breed "pet quality" animals... but I do not consider that to be a very responsible mind set. Even two superior animals can produce a "pet quality" offspring... and that is where the "pets" should come from. There are already so many nice pet quality minis out there that it is selfish to purposefully create more.
Another common mistake that people make when they breed minis is the misconception that they can make money. It is a common adage in the horse world that "to make a little money with horses, you need to start with a LOT of money!" Even the foals out of exceptional stock will rarely command high prices if the breeder does not spend a lot of money showing, promoting, and advertising their animals to begin with. It costs a lot to care for a mare in foal, to care for her and her foal's veterinary needs, and to advertise the sale of the foal. If you skimp on the care of the mare and foal, you may make a little more money, but you would not be considered an ethical or responsible breeder! And what happens if that foal you bred does not sell right away? What if it's a year, two years, or ten years until a buyer comes along? You must be responsible to spend the money to care for that animal.
Many people breed for sentimental reasons. Perhaps they just love their mare or stallion to death, and they just want another one exactly like them... in case the beloved animal dies or so they have two or just to see what they have. In this case, the breeder may be barn blind, and ignore the fact that their beloved animal has something wrong genetically like bad stifles, overbite, or poor conformation. This is also not the best choice to make, because there is no guarantee that the resulting foal will look or act anything like their beloved parent(s). A foal will not "immortalize" their parents. It is also very possible that the beloved mare may die during a difficult pregnancy, and that by breeding her they are actually placing her in risk.
I feel one of the best breeding programs a person can have is to breed for exceptional offspring that they will want to retain for their breeding program. Naturally, not every cross they try will result in a horse that is valuable to their program, but that horse should be exceptional enough that it may fit into someone else's program. A breeder should strive to have a majority of their stock "home bred". This will allow the breeder to know as much information as possible about the genetic history of the horses. Since the breeder is breeding for themselves, there is no motive to breed "just to sell the babies." Not every foal a breeder breeds will sell instantly, and a responsible breeder must be prepared to care for every animal they breed for the rest of it's life. Even a breeder "breeding for themselves" will have pet quality animals arise, or will have an excess of colts to sell. This is where a breeder should be making their money from selling foals. Occasionally a high-quality offspring may be sold to a show home, which is a good form of advertising for the breeder.
To help create a strong breeding program, even if it is a single foal you plan to breed... the key is PLANNING. Decide what exactly you are breeding for. No breeder will ever create a "perfect" animal... but they can get close to achieving a reasonable goal. As a breeder, are you going to attempt to breed the best driving animals, or animals that are best conformed for Halter? Maybe it is a little more specific... maybe you want to breed halter quality, arabian-type leopard appaloosas. Whatever it is... select the very best stock to start with that you can afford. It is probably best to start out with less, higher quality animals than to stretch your dollar to buy more, mediocre quality animals. Do be careful when breeding for color, as it becomes easier to ignore structural faults in favor of color, which is one of the least important qualities.
What are good qualities in a breeding animal? Temperament is commonly stated, although desired temperament will vary, as some people like friendly, calm animals for children, yet other people prefer a hot, fiery show horse. Certainly conformation plays an important role for creating an attractive, healthy animal that can withstand performance demands. Genetic soundness is also important in miniatures, as bad bites, dwarfism, and locking stifles are common. Although some people feel that pedigree is not very important, and that judges never see a horse's papers... I feel pedigree is somewhat important to consider in a breeding animal because pedigree gives the breeder some knowledge of a horse's genetics and predictability. A good pedigree also makes the resulting foals more attractive and "valuable" to a buyer. A show record is also helpful on a breeding animal for the same reasons. However, pedigree and a show record cannot guarantee excellent breeding ability. A registered horse that closely follows the breed standard is important though! There are few homes for grade horses that do not fit the breed standard. I believe it is also important for a responsible breeder to consider the health of their animal... and not to breed mares before they are three or stallions before they are two or even three. Just because they CAN be bred does not mean they SHOULD be bred.: