We can't see anything in that photo, so... The only answer I can give, given it's a Waterford frame is it's "probably" worth $400. I think the 1200's are Reynolds 753 steel.

Also, you read that a seat lug can crack with a 27.2 post? I don't understand that statement. 27.2 is one of the most common post sizes. If the frame takes that size, it takes that size. I don't see why it would be more likely to crack than any other size.