Ignoring the legality of it (I'm sure it was against the rules), I would say it is all down to relative value.
As bad as it sounds, sometimes what you really want the most is beyond your means... and there is someone out there who isn't really that bothered about it who buys it just because he can!
If I got wound up everytime I was outbid, I'd be completely postal by now!
I recently put a 'best offer' in for an item and it was instantly refused...I always thought it was effectively a message to the seller to actually think about and reply to...obviously you can set the offer where you like...
E-Bay is like Mos Eisley... full of villains but frequented by travellers who have to go there to trade...
...It seems like the guy selling the Phoenix Models was Greedo and Han got him good

.