The cut really should be repaired. I cannot see whether or not it is from the photographs, as many repair techniques to fix something such as this use a very thin gauge thread
I think you did fine on this rug if you decide to keep it. You may notice something here or there like minor color run perhaps or other minor imperfections. but when you get down to it, there's not too much out there to beat a price like this for an wool carpet even in machine made synthetic rugs.
As for the fringe, it's really white. I do not have the rug in front of me, but if it feels as though it's not as sturdy as other rugs you've seen, it could be that it's a different grade, it could have been bleached, or that there's a lot of material (e.g. it's thick) with not much "human intervention." What I mean by this is many coarser rugs use thicker material with less refining. Generally speaking durable fringe comes from both refining and technique. the more strands of yarn to comprise one strand, the stronger they will all work together. However, the twist or spin which is placed on each warp will also affect the durability.
If you're very concerned about the fringe, you could always use the tape method to hide it away. Otherwise, if it's loosely spun, you can try to wet one at a time and give it a harder spin to twist the fibers together. Try it out first. Remember to have clean fingers, before doing so otherwise the fringe may be colored.
Here's how to tape it up
http://www.rugrag.com/po...r-Eliminate-Fringe.aspx
Here's deteriorated fringe from bleaching
http://www.rugrag.com/post/Can-I-Whiten-my-Rugs-Fringe-Losing-Fringe!.aspx