You heard it right, a Seth Cohen action figure was kinda suppose to happen. Back in 2005 a company called Strange Mark Studios (or SMS) posted on the custom action figure site joeacevedo.com details about the figure. Complete with photos of the prototype!
According to the site they called the prototype "Skater Seth", which is appropriate although I think he only uses his skateboard in a handful of episodes (I'll have to fact check Captain Oats to verify). Look at that likeness though, curly hair, proper attire, pretty spot on replica clothing (see photo above, same shirt artwork worn in the pilot episode), not so sure about the chain wallet though - that's more a Chino thing (ewwww!). So yeah this could have happened, makes you wonder why another company didn't scoop up the idea! Sighhhh..Here's the link to the site!