Yes you can resell used clothes, books, toys and what-have-you for kids but, and this is a big but, the seller is liable if any of those things don't meet the new testing requirements.
Also all the little shops that make custom or specialty or not hasbro/mattel type products have to test their stuff and this is financially impossible for many of these businesses.
Here is a great little movie that explains the problem http://ceska.typepad.com/little_ida/2009/01/craftsbury-kids-cpsia-interview.html
Then check out this http://nationalbankruptcyday.com/archive/cpsia-cultural-genocide-another-win-for-congress/ This law will create "cultural genocide" for the Native American culture. If you can't raise your children and dress them in a way that promotes your family's beliefs and culture, then the next generation will not learn the culture and it will die.
For the Native American's (or any group that dresses children in a non-walmart way for certain events or reasons) how are they suppose too allow the kids to participate? Well if they can make their own or if they have heirlooms in which to dress the kids, then they are fine. But for people who don't have means to make their own or hand-me-downs. They are out of luck.
And along those same lines, my family does medieval re-enactment. Luckily I am blessed enough to be able to sew and make our stuff but what about the parents who have more money than time or don't have the skills. What are they to do?
This law has such far reaching consequences that haven't even really been considered. Please write your washington people and ask them to fix the law!