ebay illegal yes, but they don't do much to stop it. From the complaining I've seen about it in the NintendoAge rant thread for ebay among others that slide by unless someone does some footwork and discovers through the blocked name a bunch of bids that coincide with what you're bidding on there's not much that can be done and they don't care since they get a cut on everything including the shipping which is garbage. Shill bidding works in their favor now since they block bidder IDs, as in the past when they weren't you could see someone doing it, report it, and they'd get booted.
I wouldn't say Atari 2600 is dirt cheap or out of the interest of collectors. Lately I've noticed you're lucky to find a tested working system of any model system under $50 (because of shipping). In 2009 you could easily find a $10 2600 Jr. with a game. Even untested or non working systems are around $20-30. Large lots I used to see for $40-50 are $100-200.
Just the other year I had trouble selling complete in box games with a system.
I think maybe these prices have gone up because of increased shipping costs though.
I was joking with a friend the other day about how the e-bay experience has changed so much within the past ten or so years. For example, It was a regular occurrence finding great deals by searching for "ninetendo" and "seag". Starting to get nostalgic for the methods in which I used to hunt for retro games. Good Lord....