He is wrong on several levels.
Without using the eBay "reserve auction" listing format, there is NO RESERVE. Listing it in the auction body does not count, and eBay will pull your auction if it is reported to them.
When a non-reserve auction is over, the highest bidder wins the auction, period. You can list all sorts of silly stipulations in the text of the auction, but that does not change eBay's auction rules.
If you win the auction for $1, and PayPal the $1, the seller LEGALLY HAS TO SELL THE ITEM. Most people don't seek legal action over eBay auctions, but some have...and some people have won the lawsuit and was awarded the item. I remember reading about a private jet that sold for a few hundred bucks, then the seller refused the sale because they said they did not understand eBay rules. The buyer sued, and was awarded the jet and the seller was reminded of the eBay TOS they agreed to when they opened a seller's account.
Bottom line is that without using a reserve auction, this guy has to sell to the highest bidder. eBay has already pulled his auction, so it looks like they are already on to him.