Their filtering approach seems like a sure-fire way to filter out intact cars in favor of listings for ones like these.
Hiding similar, but slightly more expensive cars also means that you will be showing more entry level cars. I wouldn't wish the entry level chrysler 300 on anyone it is a stupid car that shouldn't have been made, but it will show up first on this search interface because of everything they stripped out and downgraded to make it cheap. If I was searching for a car with something more I would have a better time not using this interface.
What if there are two cars, one of which is $250 more, but which has a few (fairly minor) additional features and is 75 miles closer to the user? Figuring out which car the user wants to see is a hard problem.
That obviously doesn't mean it's not worth working on, but my guess is your current solution is sub-optimal enough you'd be better off displaying all of the results and simply ordering them based on these criteria. Or at least making it very obvious to the user there are other relevant results, since most people are used to all relevant results being displayed in one long list (that's my guess; I'm not an expert in this at all).
Widespread use of a tool like this would eventually put downward pressure on prices towards the sellers' reserve price; still in the short term as a buyer you could be missing out on a great deal if you ignore the "hidden" listings.
Edit2:
Searching for Manual Infiniti G35 it sadly did exactly what I thought it might do. Two '05 matches, $1k apart so it hides the more expensive one. Looking at them though the 1k gets you nav, heated seats, better stereo etc i.e. the upgrade to the premium package of that year. At 1K price difference I would rather try to negotiate for the nicer one first.
There UI does provides a simple way of showing the worse off cars so this is all moot. Really great little way to show off their tool and get some advertising. You still have to click on all of the cars.
Saved $3000 on the car (paid $5500 for it off the lot), and only spent $2000 and two weekends adding in leather seats, a locking rear differential, upgraded suspension, and extra power outlets. It's the hacker manifesto, why pay for it when you can build it?
You might be thinking of the DIY Manifesto.
Also, adding support for Canada would be great :)