There seems to be a goldilocks zone in smaller markets like this - where you can make a product at a decent profit that looks easy to undercut, and the market is big enough to support a very healthy business ... but the market isn't so big that a competitor can come in on razor-thin margins and "make it up in volume" and displace the genuine article.
Add in the fact that hobby purchases are very discretionary and a lot of people are willing to pay a little more for quality/genuine articles and this business is probably safer from simple undercutting than one would initially think.
You've hit the nail on the head. There's a LOT that goes into something like this. It's hard to replicate, and even if you did, the margins aren't there to undercut much.
Add in the fact that hobby purchases are very discretionary and a lot of people are willing to pay a little more for quality/genuine articles and this business is probably safer from simple undercutting than one would initially think.