"Granted, he might have just been posturing a bit for a prospectiv client, but it sounds like his business is large enough that he should be running it in a more professional manner or at least out of a legitimate business location."

Well, to some armor making is an art form, so, how does he making swords in his garage/basement/whatever differ from my dad doing paintings in his basement? Even in Massachusetts (where almost everything is illegal) I don't think this guy would be doing anything wrong.