Questions, answered in the order that they were asked:
1) Yes, I have dealt with him before, and it did take a pretty long time for me to recieve my videos. I think more than the time problem was his attitude. He came off very self-important, and stated that he would not, under any circumstances, answer emails regarding the deal. Unfortunately, he seems to have one of the most extensive collections on the internet, and thus, I'm probably going to have to endure his dealings some more.
2) His prices are pretty high, but like I said, he seems to be the only person who has some of the stuff he's offering. Getting what you want on tape more often then not means dealing with people who are less than favorable, as I have seen many times before. It also means paying astronomical amounts for things you didn't have the foresight to tape yourself, as this case shows.
3) Sure its illegal. Usually, organizations who monitor such dealings (ie. the MPAA) overlook such proceedings, as they are on a very small-scale. Recently, however, there have been stories of even small-timers getting popped for sales, and since he does have a much larger list than most, he is definitely a risk. I guess it boils down to what kind of chances you're willing to take in order to obtain your material.
I wont be rushing into any purchases from Toonarific, but depending on what happens when I myself get my websites back up, there may be some dealings of sorts. Time shall tell, as well as the willingness of participation of the International Muppet Trade Group.
-Matt