I agree that the policy should've been stated up front. But, since you are committed, I would find out the gauge of the project and ask what your options are for yarns. A good yarn shop owner should be able to offer several suggestions that are for sale, not just the yarn used by the designer of the pattern, unless there re specific design considerations for using only what the pattern calls for.
As for what to do with the KP yarn, I just read a great interview on Lifehacker with Mythbusters' Adam Savage.
He talks about how he always makes things twice
--- once to learn it, and the second time to incorporate those lessons into a finished project. Kinda like a "rough draft" vs. a "final draft." So you should consider the first time through the pattern as a chance to make mistakes and get messy, and then use all $95 worth of accumulated knowledge to make the sweater again in the KP yarn.
I'm taking this to heart with my next big project with expensive yarn. I'll buy a cheap yarn in similar gauge, and run through the pattern making mistakes with abandon. If I take good notes on what I do (and especially what I do wrong) the second time through I shouldn't have to stress expensive yarn by frogging quite so much.