NO. Just no. It's not ok, in no world is it EVER going to be MORALLY and ETHICALLY ok. Legally, maybe, but it is VERY rude and never an acceptable thing for a seller to do. If you say you're going to sell your horse to a particular person, then sell it to THEM. I don't care if the next person offers you more money.
This is coming from BOTH sides of the fence - buyer AND seller. As a buyer, if I knew someone else had been told they could have the horse I would never take it from them, because I've had horses sold from under me. I was particularly excited about this one gelding (this is going back over two years now) and had all organised a time to come see him and then that morning (note that it's a 3 hour drive to get there and we were getting ready when she rang) the seller rang and told me she'd sold him TWO DAYS prior. BEFORE we'd made the time to go see him.
As a seller, I can't see how it's ever ok to do that. You tell someone you'll sell them a horse, you SELL THEM THAT HORSE. A verbal contract, in Australia, is just as binding as a written one - provided you have proof that it's been made, which is why I'll never buy a horse without someone with me as witness to any verbal contract that may eventuate. Not to mention, how would YOU like it if someone promised you something that really excited you and then changed their mind and told you it wasn't going to happen?
Just my opinion, of course, but it ain't right.