I was thinking: How can BMAH be fun for everybody and still be a gold sink?
Change it to a token system.
There will be an NPC that sells [Black Coin]. Each [Black Coin] costs 1.000 gold.
Now the system. You can buy only with [Black Coin]'s at the Black Market Auction House. But you can only raise the bid with 1 coin. But there is a catch too. You can only raise the value with 1 if you have amount of coins it costs in possession + 1 (the coin you're about to add). The coins are temporarily removed from inventory. If you win, the item is sent to you. If someone outbid you, you're coins are returned by mail. When the items cost is raised to 999 coins, the buyer automatically wins.
Example 1: [Super Awesome Weapon] costs 37x [Black Coin] on BMAH. You have only 22x [Black Coin] and you wanna compete too. You can't! You are 16 coins short on the value. Cause you need 38 coins (37 + 1).
Example 2: [Mega-Aerodynamic Fly Mount] costs 82x [Black Coin] on BMAH. You have only 134x [Black Coin] and you wanna compete too. You can bid!! You raise the value with 1 coin and the 83 coins needed are removed from you're inventory. Now hope no one is going to outbid you until the auction is over.
With this system it's impossible that someone is bidding the max prize from the first minute. So everybody still has a change to win until 999 bids are done or until the end of the auction time.
But what about those people who have the coins, but not the time to babysit the auction? Also, wouldn't players quickly learn to hold off bidding until the very last minutes of the action and thereby get things for just a few coins?
A maximum bid increase in gold would do the same thing.
I don't think it's the worst idea (without the whole new mechanic of the coins) but I also don't think it's that needed. "That one guy" is still going to sit there and relentlessly camp/drive the bid up because he can.
Part 1 increasing the bid by only 1 coin at a time would take forever to reach 999 coins and whoever puts in the 998th bid is guaranteed to lose even if they had 999 coins in their inventory and someone else came along with that same 999.
Also I see that person who bid 998 coins being stuck with 998,000g they cannot use anywhere except for the BMAH after they have lost the item they were bidding on.
Those are my two main issues with your system. I see why you want to change how people bid but I feel like this coin system would just make it easier for the people who would other wise be spending gold cap to "purchase" an item instantly to save money. (i.e. One has 560,000g and they bid up to their 560 coins which is their hard maximum that they can bid, and someone with gold cap wants the item as well and would have previously spent 999,999g 99s 99c instantly instead of winning it for one coin higher than the only other bidder. And the guy with 560 coins get screwed and stuck with 560,000g in coins that cannot be used anywhere else.)
The system you have laid out makes it so that the person with gold cap saves gold wins the item for only 1000g more than another bidder, instead of the 440,000g more like in the example above.
This system would overall take away from the "gold sink" nature that Blizzard may have intended.
TL;DR The system proposed has too many flaws for it to work in a practical sense even if it is more "fun"