I read the forums about CPSIA very often and am starting to see an Idea pop up, and that's to either ignore the upcoming law, or willfully violate it. I just wanted to give you some information about doing this.
First the penalty for this are huge, and your insurance, or corporate veil from an LLC won't protect you, the fine will be personal again you, and if the CPSIA is anything like the IRS they will want to get that money, either confiscating personal and business property, or placing liens against you.
Second, most people think they wont' be going after “the little guy” I think the first people they will want to go after is the little guy. See, politicians aren't really in the business of protecting consumers, they are in the business of getting reelected by making consumers think they are protecting them. Right now, the economy terrible, and it's politician faults, so they will want to be able to say “Sure the economy sucks, and it might be my fault, But I recently cracked down on 1000 toy companies poisoning your children, vote for me!” They won't mention those 1000 companies were little old ladies making baby hats. And if they go after the big guys, they will have to go after the big guy's lawyers, which we simply can't afford as small businesses.
Thirdly, and most importantly, any sort of lying about compliance, forging certifications, or otherwise dodging the truth is consumer fraud, and really bad news.
-Chris