Sounds like it may be ok but an internal inspection would probably show some damage. I suppose that selling anything "as is" gets you off the hook on the ethics. Why not just show the buyer the following:
A friend who works at a local nursing home gave me a lightly used, but seized, 7hp Ariens snowblower.
He didn't know much about it other than multiple people used it but nobody checked the oil and it stopped.
I pulled the starter cord and it was frozen but I brought it home.
Next I removed the spark plug and put in several ounces of Marvel Mystery Oil, followed by a good amount of MMO
into the empty crankcase. The next day I was able to work it loose and after refilling it with 5w30, it started right up.

I ran it for 15 minutes and it was fine. A few days later , it snowed and I cleaned off 200' of sidewalk and a 50' driveway.

Hell yes just let the buyer know the facts advise of the Price and let them decide if they want the unit for the reduced price. Many folk replace the engine with a cheap China knock off anyways.

I have a 7HP Ariens snowblower. I think it qualifies for antique status, so I'm assuming this unit is 20 years ?? old. How much would it sell for anyway? $200?

Tell the prospective buyer the truth. If it's like mine, it's built like a tank and with a good new motor, will last another 20 years.

We paid 800 dollars for a new Ariens snowblower back in 2008, the 24 inch model. It starts easily & works fine, so I am pleased with it. Had this unit been used, in good condition, except with an engine that had been run with no oil, I might have been willing to pay 150 dollars for it.

There is nothing unethical about telling the buyer the truth up front and letting them make the decision.

Yeah, its when you don't tell them about the past problem with it, they buy it, it blows up, they bring it back, mad as all get-out, and want a refund!
What have you accomplished? Do you lie and shrugg yer shoulders, and tell them:"It ran well for me--i Can't understand what could be wrong with it--you must of done something to it!"??? (people do that--)
Safest way is to tell the prospective buyer about the problem, and give him the option of returning it, if it blows before 30 days.(With proper care) I've found this does wonders for your reputation, and makes the sales of other used equipment easier.
You have to protect your good name, so cheating folks, and they find out, makes yer good name go bye-bye, in all you do, ever after!

If it runs as it should I would not bother with all the details. The BIG BUT here is that you will stand behind the product. I always warraty the product for the season. Let's face it the engines are very simple and if it runs for at least a few hours with no problem, then my money says it will last for many years.

We had a dealer call today with a similar situation. The snow blower came in with a blown engine, the customer wants it covered under warranty. The dealer is sure from the crankshaft damage that the engine was previously run low on oil. As long as you disclose the fact and the buyer makes an informed decision there should be no problem.

Right on Rusty , Orange and CG ! Be up front Tim ! You will along with the new Owner feel better in the long run Dude !

I'd say if it doesn't smoke or knock now that it will be good for some use, but you need to tell them the truth, which simply is that it seized from overheating but was easily freed up and put back into service.

You don't want to sell your soul for $300. Tell the truth and sleep easy at night. Works every time.

Sure it's ethical to sell it as is in operating current condition. Just be sure to disclose what you know about the previously seized engine that now works.

I bought an old Ariens last yr for $100, I got 2 storms out it before it threw a rod. I didn't even consider returning to the guy I bought it from. I just re-engined it. With the new to it engine it runs great. I am awaiting a storm to see if anything fall off it. I wouldtell the guy it was an as is sale and explain the situation.

what technically does seized mean anyway....

Lack of lubricant causes metal on metal contact and results in actual scratches, then friction, then high temperatures and seizing.

Depending upon the severity, when the metals cool down, enough clearance between the two surfaces can be had so they turn again and a film of lubricant can separate the two, but the damage is still done.

In a simple case, the steel can be sanded/polished, the softer bearings or rings replaced and the engine is again made whole.