There's a difference between being technically correct, and being moral. While the language used is technically correct for the situation, omitting the information about where the rabbits end up is immoral.
Clearly OP understands that if the whole truth was told, they wouldn't be getting a free source of rabbit meat...
No of course not, it's none of the seller's business. If they say "hey we're vegan please don't eat our rabbits" that's a different matter, it would be at the very least polite to respect those wishes.
Why on Earth would returning a rabbit to a farm where they eat them be any different? In this case the possibility is perfectly clear.
If the person returning it knows that, then sure. The OP implied pretty heavily that they don't know the ultimate fate of the rabbits.
As far as these people know its "A farm where they sell breed and sell rabbits as pets", not a farm that raises them for meat.
In this case, the parties are close relatives, so I would argue that their threshold of duty to disclose such facts is somewhat higher than in case of complete strangers.
So there is no legal duty or obligation, but morally, the expectation on both parties are definitely not the same. Otherwise they would tell them that they would cook them when they return them. The fact they are hiding this information shows that expectations are not aligned.
That's an outright lie, since they aren't letting the rabbit loose to live on the farm -- they're eating it.
I do hover, object to lying. Like OP said - they(everyone in fact) have the right to make an informed choice. By omitting this information, people who are returning a rabbit aren't making an informed choice. It's a trick, a ruse, if money was involved I'd call it a fraud.
Nothing to do with squeamishness.