No. I'm surprised the auction site even allows this.
I was also very puzzled by some of the domain listings I saw on a major auction site, where sellers were trying to sell a domain name that "might" become available. The implication was that they didn't even own it, but were perhaps...
Yes. Sedo had some very negative Trust Pilot reviews related to the problem in the past. They responded to the issue. Verification is now strict, and I see that their ratings overall have improved.
So, basically what we are continuing to see is a domain front-running schemes on these marketplaces.
Let me highlight one of your key questions:
So, if someone thinks your domain is a good buy at that price, and could possibly sell for twice the amount, wouldn't you prefer that they pay you...