Setting error text in Commerce Alter Form Module
I guess you can obtain the field value using this. 

if ( $form_state['values']['field_i_have_read_and_i_agree_to'] == 0 ) {
  //or use this in if statement $form_state['values']['customer_profile_billing']['field_i_have_read_and_i_agree_to']

      form_set_error('field_i_have_read_and_i_agree_to', t('You forgot to check the required checkbox.Please try again.'));
    }


You shouldn't include ['customer_profile_billing'] unless you have set the #tree to TRUE.