Am I justified in my frustration?

Having read this thread, just my 2 cents,,
If I had purchased that 8.75 sight unseen, because it was a good distance away and I was only going by the verbal description from the seller, I too would be complaining.
However, from what the OP said, he was in a booth next to the seller and even with the part in close proximity, did absolutely no inspection of the part over an entire day. If there is a fault it lies with the OP for putting other activities ahead of understanding what he was purchasing.
The seller returned a good portion of the selling price, and your action of buying the part early on the swap meet prevented him from selling it to someone else at the asking price. Just because you did not steal the part, you think you were taken. A 'serviceable' complete B Body 8.75 will sell for more than $350.00 and it sounds like that is what you though you had bought. It was your own lack of attention that got you where you are. It will take some work getting that rear assembly back on the road, but I think you did fine getting it for $250.00