This brings up an interesting "issue" with trades vs selling. Typically, one posts a price he/she wants for their knife/item & you may/may not sell it at that price or possibly haggle. No problem there.
On a trade, though, it's set-up more like a auction, in that the trader "fields" offers & decides on the best offer. That's fine.
One thought is that if 2 people agree on a trade, then it's a trade (Basically the honor system). The other thought is that it's the Trader's knife, therefore, they can trade it to whomever & for whatever they want.
In this instance, though, this is more like a purchase, though it is a trade. If the person agreed to a custom knife & sheath, I think that person should honor & carry out that trade. After all, they know that the other person is making something "special" for them, not their usual item. In this case, I'm "guessing" that the knife itself could probably be sold, but the left handed sheath "could" be harder to get rid of.
That, IMHO, is a different issue vs the typical trade. In this case, "trentu" is out something. At the very least, I would think that "mdsmith" "should" offer to compensate for the sheath. I know I would if it was me, IF I changed my mind, but I honestly don't think I would simply because the other person is out something if I don't & I don't find that acceptable (I wouldn't want that done to me).
It's one thing if no one's out anything, I think it's different if one party is out something & that changes things, IMHO.
I'll admit it would be better to hear from "mdsmith" & get his side of the story.
I hope it works out in the end.