The market managers absolutely can (and should) kick him out of the market. The fact that they are aware of the issue and haven't already done so probably means this is a longtime and popular vendor, and they are trying to balance customer demand with bad behavior. One of the basic rules (there are MANY, and they vary by market) for anyone selling anything at a farmers market is properly labeling products. If you can prove that the product was mislabeled, they would have hard evidence of a violation. While I realize this isn't the most concerning infraction, it might be the easiest to prove. If this was indeed at the Madrona Market, I would try contacting the Seattle markets via email or phone and see what they can do. The behind the scenes organizers may not know about the issue and may have more power to remove a vendor. Here's the link for all the contact info -
http://www.fremontmarket.com/contactMay.html
And the rules -
http://ballardfarmersmarket.files.wordpress.com/2010/03/sfma2010applicationpack.pdf
The markets are very selective about who they let in, so they really ought to be just as picky about who stays. There are many vendors who would be willing to fill their spot. Oh, and to answer your actual question, of course you should take it! Spend it anywhere but at this asshole's booth. Good luck.