The truth is, while the GSD mother could be an absolutely fabulous dog, her non-registration with the AKC is probably proof in the pudding that she is not AKC-eligible. And if she's not AKC eligible, then the fact that these pups have a registered dad means absolutely NOTHING. In order for it to matter at all whether or not the parents are registered, BOTH parents have to be registered. Then, and only then, can the litter be registered. And then, individual pups can be registered.
This is a quote taken from the AKC website (http://www.akc.org/reg/about.cfm): "The American Kennel Club registration system can be described as a cycle, which is repeated every generation. A convenient starting point is the registration of a litter. In order for a litter to be eligible for registration, the sire (Father/stud dog) and the dam (Mother/*****) must be individually AKC registered and the litter must be whelped in the United States. Registration of the litter must be completed before any of the pups from the litter can be individually registered with AKC. Application to register a litter must be submitted on a Litter Registration Application form. This form, as well as others mentioned here, is available upon request. The owners of the sire and dam should complete and sign the appropriate portions of the application and submit it to AKC with the required fee."
The AKC also states this about the health of registered dogs: "There is a widely held belief that "AKC" or "AKC papers" guarantee the quality of a dog. This is not the case. AKC is a registry body. A registration certificate identifies the dog as the offspring of a known sire and dam, born on a known date. It in no way indicates the quality or state of health of the dog. Quality in the sense of "show quality" is determined by many factors including the dog's health, physical condition, ability to move and appearance. Breeders breeding show stock are trying to produce animals that closely resemble the description of perfection described in the breed standard. Many people breed their dogs with no concern for the qualitative demands of the breed standard. When this occurs repeatedly over several generations, the animals, while still purebred, can be of extremely low quality."
If you're really interested in having a GSD puppy, look for another breeder. If, however, you'd be just as happy with a shelter dog, please do that instead. Many breeders have people on waiting lists for eyars because demand for purebloods is so high; meanwhile, shelter dogs usually have, at most, 30 days.
If you're worried about temperment and health of a dog, you can always check out rescue groups. They often will rescure shelter dogs and have them checked by a vet and let them live with them - so they get to know the dog's behavior and specific needs before you ever have to worry about it.
Good luck!