this is definitely a copyright issue.
if it is an original design, or a truly original way of using traditional blocks that you would never have thought up on your own then you would be very wrong to copy the quilt - regardless of whether or not you try to sell it or use it in a show/competition. it may be "merely" unethical, or actually illegal, or both.
making a few changes here and there does not change somebody else's design into your design. that's a myth.
if the design is protected by copyright your opinion as to whether or not you should be allowed to do as you please is irrelevant. the law is the law is the law. and it's wrong to break the law, whether you agree with that law or not.
put yourself in the designer's shoes. she's trying to make a living. copying somebody else's orginal, protected work without their consent is stealing. plain and simple.
you are obviously concerned and want to do the right thing. good for you. :thumbup:
if you want to make the quilt but don't want to buy the kit, pay the designer the courtesy of asking her permission to replicate it or for a way to buy a legal copy of the pattern.