If theyre selling it as a genuine article, then yes, thats deplorable and illegal. If they are selling it as a replica, fake, counterfeit, or "in the style of", then no, it's not illegal. Here's an example from the paintball/airsoft world.
NS Star makes many aftermarket parts for airsoft, paintball and even real firearms, especially optics. An NC Star Eotech replica goes for around a hundred bucks at most places. The real-deal Eotech often goes for closer to 700-1000 dollars. Which would you buy? They are essentially replicas, right down to the warning lables and markings. However, if someone were to throw an authentic Eotech sight on their paintball gun, i'd look at them like theyre nuts.
If there is a forum rule prohibiting replica/knock-off stuff, then yeah, it's pretty clear and obvious, if they're selling it as the real-deal, then yeah, thats pretty obvious too. If theyre just selling an admittedly fake watch, and saying it's a fake, then just don't buy it. Let the watch company get up in arms over the fact that there are more fake rolex's out there than the real deal. It doesn't depreciate the value of a real Rolex.
Also, there is a big difference between counterfeit watches, and counterfeit money. One is a federal crime, the other is copyright/trademark infringement.
If you don't support the seller, don't buy from the seller. Leave the whistle-blowing to the Mods charged with keeping an eye on the classifieds threads.
*Not trying to sound harsh, or saying you shouldn't be concerned about it, but trying to explain that even though some things seem wrong, they're not necessarily illegal. (Just as some things that are illegal, don't necessarily seem wrong)