I don't see a problem there. He still has to pay the ebay fees and everything, so he will loose anyway.
And he won't bid on the item himself if he thinks it's an adaquate price.
And he won't bid on the item himself if he thinks it's an adaquate price.
Now, you could equally well have a different auction model, whereby the seller gets to make as many bids as he likes. But this model would be much less attractive to buyers, since I know even if I'm the only buyer the seller is just going to keep increasing the price until he thinks he's got to the maximum I'm possibly going to spend. So as a buyer I'm much more inclined to buy on the single-reserve system than on the multiple-seller-bid system.
Dummy bids are a problem as old as auctions themselves, but it's good to see people being prosecuted when they're caught.