Well, I believe the right answer is what is right for this very situation. There is not one simple answer that can be applied for every situation.
With a short sale, it is imperative that the agent or agents working on the transaction understand how to progress with diligence. I am not clear that bringing in another agent to represent the seller -- you already have a contractual understanding that you will be buying this particular home -- would necessarily be in your best interest. Because some agents cannot wisely navigate a short sale. And an agent who is not talented in this regard may actually cause damage and blow things up.
I would say a good rule of thumb is to have each side have "an agent" yet some things are not black and white.
Something else to note is that banks prefer 4 percent total commission in a short sale. Wells Fargo said to me recently that 4 percent is the amount that can be approved without going higher up for an exception. The standard (well, if one can call it that) is 3 percent per side. It is extremely unlikely that your agent is going to be compensated 6 percent. Some homes right now are offering 4 percent for just one side (especially hard to sell foreclosures). So, the compensation should not be too far out of the realm of normal.
I would not say dual agency is bad in and of itself. Now, two very good agents, one each representing each side, is definitely best. But not every situation can provide that.
You can do some research on what your due diligence should be, and what appropriate steps should be taken to inspect the home once you get bank approval. If you don't get bank approval, the whole thing is "moot" and meaningless.
If your agent wins you bank approval, well, I'm not sure that the dual agency is something that worked against you.
I personally do not "double end" and do not seek opportunities to represent both sides. It is not the best place to be in when you get into a pinch. It is fine when things are smooth sailing.
However, because you chose the agent, you do have the upper hand, and the power of your agent wanting to represent you in the next purchase if anything with this one falls through.
If your agent's motivation is to have everything smooth, clear and as few complications as possible, then it might actually work in your favor.
I would say in general, bad idea. However, in this case, have a frank conversation with your agent and communicate your concerns. It could be the simplest path to a closer of escrow.