[celoknob]

I generally agree with the OP, although I would probably not call it eBay shilling or illegal just poor practice.

Once the high bid was determined to be a non paying bidder or otherwise fraudulent then the auction is compromised. Once the auction is compromised there is no valid reason to use an invalid bid to determine the appropriate price point. If any 'second chance offer' seller option is automated through eBay, it should be the next increment above the new 2nd highest bidder.

Two other points:

1) this practice could certainly encourage sellers to get a buddy to shill bid for them knowing there is less risk if they accidentally over shill and the reward is the option of offering the item (possibly well) above true auction value or having the buyer reject but now with the seller having valuable information of what someone will max bid on it. We certainly know this shilling by acquaintences or by using second accounts happens and is not always easy to detect.

2) of course the seller can just offer the card as a buy it now to the new high bidder at their maxed out bid from the compromised auction, but this should not be an automated eBay feature and as a buyer I would be weary it could have been shilled. In any case the seller is benefitting and the buyer is losing from the inappropriate activity whether it was selling or not.