Richard, eBay (at least the US version) works on a system of 'proxy bidding. Thus, if the highest amount bid by the current high bidder was $100, bidding $200 for the item would only raise the current bid to $102.50, $2.50 being the minimum bid increment at $100. Then, if someone bid $150, you bid would be raised to $152.50 and you'd still be the high bidder until someone was willing to bid more than $200. So, if I'm willing to pay $300 for the item and enter that amount in my 'sniping' program, a bid of that amount will be placed on my behalf in the last few seconds of the auction. If, at that time, your $200 bid was the highest anyone had been willing to go, I'd get the item for $202.50, not $300.

As far as the current situation you mention, I doubt that I'd bid. Especially for guitar auctions, there seem to be enough instruments for sale by people who know something about what they're selling that I usually avoid those that 'don't know a thing about guitars, we just found this beautiful and valuable instrument in grandpa's closet after he died.'