Right, you had a question(s). Yes, you're right. Things are either public domain or they're protected under copyright (and that includes creative commons stuff, too). Because Crissy debuted in 1969 and hit her stride in the 70's, the patterns are still protected under copyright and renewal wasn't necessary. The website owner is acting as if these patterns are "orphan works." That's because the Ideal Toy Company, who probably owned the copyrights originally, has disappeared. It's been swallowed up by Mattel and by CBS Toys (which also went under). And because the doll's been dormant, the site owner is probably assuming there will be no hassles. In other words she views it as an untended copyright, sort of like the tree that falls in the forest and no one hears (or records). That may be the case, although USPTO records show that Mattel still maintains a live trademark for Crissy for dolls and doll clothing. So, we're going to presume that Mattel -- who's not known for being a shrinking violet when it comes to litigation -- will roll out the big guns if someone comes out with a rival Crissy doll.
The library thing. You're right about the library analogy. A library has the right to circulate copies of works. It doesn't have the right to make copies of the works (with the exception of some archiving exceptions). The patron's use of a photocopy machine may be a fair use or it may be an unexcused infringement. That's why libraries post those notices on photocopy machines, to deflect liability for the illegal acts that patrons may use books for. And the laws regarding a library's rights differ for printed books, digitial books, movies, music, etc.
The watermark. We haven't seen the watermark, but if Mattel is actively pursuing infringers of Crissy, they may have a good argument under trademark law that the watermark confuses consumers as to it's source. On that basis they could stop the distribution. (But maybe the giant won't wake up for a website that's distributing 40-year old doll patterns.) Oh, and in case you're interested, the patent (pictured above) for the hair-growing device is in the public domain.