The tire looks like it is probably just fine. As others have mentioned, it appears to just be in the rubber, and the real strength in the side walls lies in the cords. Of course the rubber does protect the cords some.

How many miles do you expect to put on the tires in a year? Tires per year? Years per tire?

If you're expecting to wear it out in a year, then the cords won't have time to rot. 5 - 10 years, and you may need all the extra protection you can get.

I'd probably just put it on the back and ignore it. Maybe talk to the store about getting a discount for a spare. Then don't rotate tires, just grind that one down and rotate when you replace it. I would be a little frustrated with a brand new $60 tire with a defect, but I don't look at my tires with a magnifying glass either.

Any idea of the cause? Was the defect near an inward or outward fold?