Well, considering your car's potential value just dropped from around $90,000 to about $25,000 I'd be really pissed off if I were you. I'd be mad enough to make a trip to MI to face the guy down personally. Hmmmmm, actually, he sounds like the guy I bought my '66 Mustang GT convertible from last year (Ebay). It was supposed to be an absolutely rust free easy restoration. Yeah...so far I'm in about $10,000 not including the price of the car and the rest of the work. Your seller's name isn't Barry Hale by any chance, is it?
In 1987 I did a ground up resto on a '62 SS vert, and if I remember right GM really didn't have a designation for the SS package in the VIN or trim tag. If it has all the correct trim...including the correct rear panel and ALL the interior bits...it may be still considered an "official" SS. The engine is an entirely different matter. A 409 SS vert is solid gold. I had friends back in the mid-60's who had 409 SS coupes, but the vert is really rare. In fact, the guy who soda blasted my Mustang has a SS 409 vert with a bench seat. I'll ask him for any details if you want, or if there really is a GM identifier that will reduce the value of yours.
As far as your seller goes, obviously he sold you a car that is not worth nearly as much. Have you checked to see if he sells regularly or is a dealer? Lots of guys out there act like hobbyists when they really turn a lot of these cars. Some get 'em cheap and add the trim packages to make big bucks. I know there are "services" who will make a new trim tag to match the car for about $250. I considered doing that on my '67 GTO before I sold it because it had a color change, but it sold so fast that it didn't matter.
You can sue him, but you will probably need to file in MI. You can file in CA, but he can file to deny the jurisdiction. Then, you have the problem of collecting. I still haven't filed against Barry yet, but will if I get a MI attorney in or close to Flint. Has he offered to "undo" the deal? Legally, he has sold you something other than what he claimed, but if he added any disclaimers you might have a problem. Did yoou have anyone inspect it? I think a judge might ask why you didn't verify the engine #. Did he lie about the #?