My perspective on when to breed, is to wait until the prospective parents are over two years old. Most of the traits we are looking for emerge around puberty (six to 12 months of age), as well as some of the behaviors we do not want to see. By 18 to 24 months of age the dog is settling down into its adult role. So purely from a selection standpoint, we need to wait until the dog has had time to fully express itself.
From a physical and health standpoint, females should not be bred until at least two years of age. These dogs are very prolific, and also tremendous milk producers, and a litter takes a lot out of them. For this same reason, I prefer to breed a female no more often than every other year, rather than a litter every year. Males can be used at a much earlier age, but the above criteria about maturity and expression of traits needs to be considered.
As to what to be looking for? I guess that depends upon the goals of your program and breed, which vary from region to region. The basic LGD traits are attentiveness (stays with the sheep), trustworthiness (does not harm the sheep), and protectiveness (protects the sheep). What you require for attentive and what I require for attentive might be different things. There also seems to be a bit of a conflict (we can call it negative correlation) between trustworthiness and protectiveness. The more assertive dogs toward predators often go through a difficult stage during puberty, during which they might be less than trustworthy with sheep. For example the more assertive dog might also be more of a bully with his food, play a bit rougher, or express dominance over sheep which can lead to some torn ears or wool damage, or even a few dead sheep. Usually these things diminish after 2 years of age.
For my own needs, I need a dog that will stay within 1000 feet of the flock, that is very assertive with predators, yet not a liability with people, and trustworthy with sheep. I strive to look for dogs that are easy to raise, that is, dogs that have a very strong bond with sheep, and that are gentle with stock. I might add, it is rare to find a dog with all of these traits expressed to perfection.
My perspective on conformation is this, behavioral traits trump physical attributes BUT we can't totally ignore conformation either. There are a preponderance of structural issues in the LGD breeds, some maybe just aesthetic and others affecting function. I evaluate limbs by watching the dog move. I like to see a free and easy trot that has lots of reach. I'm concerned if I see a dog break into a lope too quickly as I think this can be an indication of pain in the hips or stifle. from the front I watch for good straight action with paws prints coming in to the center line, and watching for smooth action in the shoulder and elbows. In the hind legs, there is a preponderance of post leggedness in the LGD breeds (straight through the stifle joint). For most dogs this is not a problem, but it can be a handicap if the stifle is extremely straight. I like to see at least some angle from the pelvis to the stifle and hock. A dog with a straight stifle will not have as much reach in the trot and can develop problems in the hocks. A scizzors bite is preferred, although if the dog exhibits excellent behavior traits I'll put up with any reasonable bite as long as the teeth mesh well. I personally prefer a broad head with low set ears, hanging my hat on Ray Coppinger's paper regarding head shape and ear set correlating to predatory behavior (the more long and narrow the head and muzzle,and more upright the ears, the more predatory instinct). Entropian seems to be a problem in some breeds, so I also check for good tight eye lids that do not droop or roll in.
I am fine with a wide range of coat types, but shy away from dogs with the extremely heavy coats that mat. I've come to enjoy a variety of color, although it is my observation solid dark colored dogs do not sell as well. So I prefer dogs with a preponderance of white or tan for the basic body color.
These are based upon my own needs, experience, and preferences. Surely others will have a different set of goals to suit their needs, and preferences.
Tamarack Prolific and Ile de France crosses