Breeding plastic horses may sound like something that you don't want anything to do with, but it really isn't as weird as it seems. The better term for model breeding is pedigree assignment. You assign a pedigree to each of your model horses and you've just joined the large group of model horse enthusiasts involved in pedigree assignment.
Assigning a pedigree to a model is generally done in one of two fashions. The most common method is to request model sire and dam lists from people, select suitable parents, and send the required fee and information to the model owner(s). Your model's parents do not have to be models though! You can also use pedigrees of real horses. To do this, search through stallion ads, especially in various breed magazines. When you find a horse you like, make sure (s)he is suitable to be your model's parent and was available in the year your model was "born". DON'T ask the owner of the real horse for permission. He or she will probably not understand what you are asking permission for!
There are several factors you should take into account when selecting suitable parents. Most importantly, the parents must be the same BREED as your model if you want your horse to be a purebred! (Warmbloods are often an exception. Some warmblood registries will allow any horse that meets the criteria to be registered.) You may want to do some research on the breed your horse will be. Find out what colors they come in and if there are special types within the breed. Arabians, for example, come in many strains (Egyptian, Polish, Crabbet, etc.).
While researching your breed, you probably came across the COLOR requirements. Your model should meet these requirements. When selecting parents, keep color genetics in mind. An excellent book on this topic is Equine Color Genetics by D. Phillip Sponenberg, DVM, PhD. The Ultimate Horse Book by Elwyn Hartley Edwards briefly covers color possibilities. This book also covers many breeds of the world. Both of these books are available from Cascade Models. If you do not have a good background in horse color and have no access to books on it, always choose parents the same color as your model. This usually works! (However, if you read Sponenberg, you will find several exceptions to this.)
You will have to decide on an AGE for your model. This is not the year when the model was made. Your horse can be either non-aging (recommended for foal models) or aging. Aging horses are given a birth year and therefore will grow one year older each year. Non-aging horses are given an age (ex. 7 years old) that never changes. No matter which method you choose, the "foal" must be younger than its parents! Real horses are rarely bred before the age of two. The gestation period for a mare is approximately 11 months and it is 12 months for a donkey jennet. Therefore, all models should be at the very least 3 years younger than their parents.
If you decide to use model horses as parents, you will often be asked to pay a small "breeding fee" and to send a LSASE. In return, you are usually sent a pedigree and/or breeding certificate. The breeding fee is almost always under $1 (US) with most fees beeing 10 cents per parent. You will also be asked to send information on the "foal" with the names of the parents you have picked. A few additional tid-bits here, your model can be sired by any other sized model or brand name. However, if you think there is a chance of ever live showing your model with one of its parents, you might want them to be the same size.
Once your horse has lineage, (s)he can sire/foal other models! Make sure to keep good records. To be realistic, you might want to limit mares to one foal per year. Some people say that they use "embryo transfer" and thus allow their mare to have several foals a year. Stallions may have lots of foals per year.
Pedigree assignment allows you to learn all kind of interesting facts about different breeds, colors, genetics... You "meet" new hobbyists and make your models more "life-like". So give it a try! You may just like it!