I thought that under a community group like this (...) that copying stuff would be the norm not the exception.

Normally, I would agree with you. This particular instance, however, is not in the community sharing spirit and is explicitly against ebay's user guidelines. I'm taking a stand on this particular instance because I've seen other ebay auctions which contain similar (and also worse) abuses, and I think an example should be set.

Also, as mentioned before, I think it's wrong to show a modded player for an auction which isn't selling a modded player.

Also, I've seen auctions where all they're selling is public-domain information... "Buyer receives a link and instructions on how to download porn from the internet." If I'm not mistaken, these are also against ebay guidelines, and showing a picture of a modded player and saying "Buyer will receive links on how to do this to the player if he wants to" is dangerously close to this line.