Unless a Pug is shown and does well, preferably earning his Championship, he should not be bred. The other option would be to have several highly successful show breeders evaluate him for you. If they believe he's worth being bred, they'll tell you.
Pugs have genetic flaws , like any other breed.
You need to do some pretty extensive health checks for things that your dog may have without you knowing of it, including but not limited to leg perthes, luxated patella, cataracts, PRA, and others. But this is not enough. If you didn't buy from a reputable show breeder, your breeder almost certainly did not screen the parents of your dog, does not know the genetic background of your dog through pedigree research, and did not keep close track of your dog's siblings, aunts and uncles, cousins, to see where and if genetic problems came up. By breeding your dog, even if he checks out healthy, you are basically embarking on a genetic crap shoot, and your dog's puppies and the future owners of those puppies are the ones who will suffer if you roll wrong. Pugs are hard to breed, as the breeder you spoke to told you regarding the small female.