Tom,
I understand your frustration. But you should not make any type of legal communication with Etsy or the other party without the advice of an IP attorney. The first thing you want to understand are your rights to the work. Second, you want to understand what you hope to gain or accomplish through your legal actions. And third, you want to prepare a proper legal strategy on when and how to contact the other party.
I know you are anxious to take action. But it is in your best interest to be patient and get proper legal advice. It is also important to understand that copyright protection can be very loose. You say the other design is slightly modified. There is no specific amount of change that makes an existing design legal to use, but it is possible that the changes are significant enough to be considered a new work. It's really in the eyes of a judge to decide. So again, it's a good idea to get legal advice before continuing.