Quick question: is your bike titled as a 1971 (and built in 1970) or are you going by the manufacture date on the steering stem? There is usually a one-year discrepancy between the year the bike was built and the year it is registered.
But if it's truly the guy's fault, yeah, he should make it right, which includes refunding your money and refunding your cost to mail it back to him in VN. I'm a seller and a buyer on Ebay, and if it's my fuck up, I cover return postage. Part of the problem with returning something to VN is you can't buy delivery confirmation unless you send it FedEx -- I don't think USPS will accept it. But the mark-up point is correct -- there is a huge markup for work like this. I've done business in a neighboring SEAsia country with a similar economy, and you guys don't want to know what it would cost to get good work like this done on the street.
That being said, it's generous of you to offer to buy a new one and try to sell the old one. Even if you returned it and he had to pay return shipping, he could likely resell it and still recoup his loss (that's how much the markup is).
A final note -- if you are looking at stuff made in SE Asia or India, you can always write to the seller first and try to do a little bargaining. That's how shit gets done over there, and sometimes they'll agree to lower their price. If they don't, walk away (figuratively), and see if they write back.