How I handle 'odd' bidding patterns that might appear to be shilling to other potential bidders:
I had a pool cue I was selling jump from $86 to $156 last week, which I thought was curious (yes, as a seller I monitor the bidding on my items - imagine that!

).
I checked the bidding history and a 0-feedback bidder had bid a tiny bit at a time, repeatedly, until he just edged out the former leader.
I retracted all of his bids, blocked his i.d. and sent him a pleasant message telling him that I didn't mind his bidding, but it looked a little odd and I wanted an explanation. If he could give me one, I would reinstate him and would love to see him bidding.
I then sent a message to the new leading bidder, apologizing for what might have been okay bidding, but assuring him that I monitor such things closely and everything in my auctions is legitimate.
Obviously I know the guy wasn't a shill bidder, since it's my own auction. My suspicions when these things happen, is that it could be someone I've had a run-in with on a discussion board - yep, there are some who will NEVER let anything go, and revenge, even on the internet over a discussion, is as good as their life gets. But even if it's just a new bidder who hasn't a clue how to behave on ebay, it still looks bad to other bidders, so I have to take some sort of action. If the bidder explains themselves, then I reinstate them and we go on our merry way (it's happened

).
But this guy explained himself just as I expected him to. It was a past bidder who had been such a pita that I had blocked his other i.d. If someone really wants a bite out of you, they will find a way to get it.