I think it's way too good at $2. Any +buys or strong trashing would make it between lab+peddler in power, and even its vanilla bonus is okay at $2.
Well its vanilla bonus is a pretty weak $2 effect if Squire is any indication. And unlike an actual Peddler and Lab, you have to have both cards in hand when you start; with Peddler and Lab, one might draw the other.
That said, it could easily be too strong for $2. Probably it would seem weak at $4, but might be a good $3.
Can you then pay (2) at any time to turn the card around?
I don't understand this question. I think the answer is no?
How does this interact with Horn of Plenty? Peddler? Procession?
Peddler treats it as an Action card because it is one. Procession cares about the cost of the original card because it's back to being itself by the time Procession looks at the cost; Procession on Band of Misfits works the same way. Horn of Plenty is a very good question. I need to either specify that it's a
nameless Action card with the ability "+3 Cards" or just say that you can play it as a Smithy (and explain what a Smithy is).
My mystic abilities tell me that a lot of people are going to shuffle cards the other way around.
You can see the future!
EDIT: "You may set aside an Action card from your hand. If you do, +3 cards. At the beginning of your Cleanup phase, discard all set aside cards" is simpler, I think.
Simpler in some ways. But it doesn't cost an Action to set it aside, so you'd also need a "Choose one" on Factory, making it more complex. Also it would work differently with e.g. Throne Room. As written, you can play Throne Room/Throne Room/Factory x2/FauxSmithy x2.