I know what you mean. This sort of thing is exactly why I sell a lot less on ebay than I used to. I also can't believe the crap some sellers try and pawn off as "Mint" or "Like New". I'm talking about stuff that should have gone in the garbage it's so bad. Overall though I've done alright, I've been on ebay since '99 and I've only been bitten a couple times.
The feedback system is certainly flawed. I've let things go before where I should have left a neutral or neg just to avoid the retaliation. I'm sure we all have.
=Jeff