I agree with Scarlette. Excersise is good for the mare, as long as it's done properly, i.e. don't take an animal that's in poor condition and do a 20 mile trail ride when she hasn't been ridden in 5 years - sort of the condition of my mares, brood mares that are slowly being brought back into the swing of being worked after several years off.
As far as breeding quality animals, I agree with that whole heartedly. I have a Lipizzan mare that I think would produce a very high quality dressage horse if crossed with our paint stud who has excelent movement and outstanding conformation and temperament. I refuse to breed her to him, as I don't think that the foal woudl be very marketable due to the paint/quarterhorse in it's background, and I already have the Lip and her daughter to train, so I don't want to produce a foal that I won't be able to find a home for.