I got in on this way late, but some words from me ( I am a licensed used car dealer in Texas.)
1. In Texas only licensed dealers are subject to the DMV "dealer rules." Even if the "Mom and Pop" dealership transferred the title across from seller to buyer (which is common and legal if you hold a dealer's license), they could have very well checked one of the two boxes on the back of the title that allows for either a.) Mileage shown is incorrect or, B.) Mileage shown exceeds mechanical limits. If they did neither, they have potential liability, but only to the extent that if they acted fraudulently, which is unlikely over a $5K truck. More likely they acted out of ignorance. Dealers who commit odo fraud do it for much bigger numbers, like when you own a truck for $3500 and want to sell it for $6500.
2. The Texas DMV/DOT and AG do not care about person-to-person odometer fraud because they don't have enough resources to pursue it. If an individual is scammed, they need to get a lawyer involved and take it to court.
3. The FIRST THING EVERY BUYER SHOULD DO when looking at a used car is determine whether or not the mileage is accurate. Everything else comes after that. In this case, you might have thought $5k was a good deal regardless of miles, but just imagine what could have happened if you had bought the truck without the CarFax knowledge and then tried to sell it later to someone who had CarFax knowledge. Your "good deal" $5k truck could have had YOU in hot water.
4. Every seller must make a representation of some sort (actual, not actual, unknown, exceeds mechanical limits) at the time of sale. Therefore, a buyer should never purchase a vehicle with odometer issues unless you have properly completed paperwork to match. Most states have options on the title that are filled in during transfer that state the mileage. You could inherit a problem bigger than the good deal you got.
Lastly....
This happened to me back in 1996...and all the LSLC guys know the story of Freebird, my awesome tan FJ-60. I drove it home, called the selling PO, found out the used car dealer selling it to me rolled the mileage. I called BS on him and told him to either FedEx me the title along with a 100% refund, or I was calling the OAG. Two days later, his lawyer called and faxed me a release to sign. My check and the title showed up fedEx the next day. I owned it for $0 and then spent the $5000 I had ready to pay for the truck on restoring it. But when I sold it, I declared the odometer issue to the buyer and did the appropriate paperwork.
Moral of the story....Buyer Beware.