Does anyone know if it is declared anywhere whether a person is operating a bought reputation?
Personally I don not see this as analogous to a real life situation. It is common knowledge that over time a restaurant for example will change hands, and more often or not it will declare in advertising, or its window, that it is under new management.
I doubt very much it is common knowledge that ebay stores/reputations can change hands. In this regard I consider it dubious ethically.
That being said, it appears to be within the rules and I wish red well. I've never been a customer of his, but by all accounts he is a reliable sort.