I don't have a problem with an auction house employee
winning an item offered in the auction; the more legit bidders, the better for the consignor [assuming
arguendo that the consignor is actually paid for his lot
]. I can see, though, how allowing the auctioneer to bid could allow the auction house to shill bid the item, so unless a third party is administering the auction in a manner that somehow prevents the auctioneer from seeing the max bids of the bidders, it would be problematic to allow the bidding.