Well, I just googled it and apparantly, the foal was born in 2005 but sadly died due to some health problems. This breed is bred to have very short fine hair and on occassions they produce these foals. They rarely live to a ripe old age due to other health issues. I think its similar to problems that Kennel Club is trying to sort with regards to interbred dogs for "perfect" pedigrees.
have had a bit of a poke around on the web, it is a deformity that comes as a result of the inbreeding, producing very sick little foals that do not normally survive. look at this site, it has a statement from an AT breeder:
poor babies, i would be horrified if i found a mare likely to produce mutant foals like this and would never risk breeding from her. Although then again, i wouldn't inbreed either. That guy breeding them purposely makes me angry too, idiot.