In recent years Pennsylvania has joined Missouri and Kansas as prime puppy mill country. The only difference between the dogs you describe and the ones in the pound are a cute website and the fact that the puppymiller has cut the middlemen (the broker and the store) out of the deal.
You can get a mixed breed pup of virtually any combination at a local shelter, and will be able to see in person how healthy and mentally and emotionally stable it is before adopting it. Genetic health will still be a crapshoot, but you will be saving a life, which is no small thing.
Interestingly, the Amish have taken on dog breeding as another cash crop and supply many of the pet stores in the Northeast. They view the dogs as livestock and treat them accordingly. This may or may not make things better than they are in the commercial mills in the midwest. Because of the insular nature of the communities, it's even harder to see what conditions are for the dogs kept there.
A true "breeder" is someone who has devoted their life to a breed -- she shows her dogs to have them evaluated for quality by third parties, she knows the health and temperament history going back generations on the dogs in the pedigree, and performs extensive (and expensive) health testing to rule out carrying any potential screenable genetic diseases forward into the future.
I'm not a small dog person, but there are genetic diseases in pretty much every breed of dog (and with a mix you can double up on the variety of things to be worried about). Someone who is devoted to the breed will be testing parents and eliminating dogs from the gene pool who carry an identifiable gene, or demonstrate through other health testing (echocardiograms, electrocardiograms, etc.) that they are at high risk.
And yet in most breeds, a purebred dog from a conscientious breeder will cost LESS than the puppy mill dog in the pet store. Probably more than the one sold direct from the puppy mill, but along with the puppy you'll have a little more peace of mind AND a mentor to stand by the pup as it gets older and you need help.
Commercial dog farms take dogs of (probably) the same breed and simply breed them until they drop. If the stud dog drops dead at 2 from an inheritable disease that could have been identified at his 6 month checkup with a blood draw, they don't care -- they got a year and a half of breeding out of him. If their favorite breeding female (gets pregnant every time and has large litters easily) is a vicious snarling beast -- what's it to them? It's not like anybody has to touch her to hose out her cage once a day.
Please do research before buying a dog that will be a family member for the next decade or more. Here's an excellent place to start:
http://www.canismajor.com/dog/responbr.html