I don't see the problem with private bids as long as they can be verified.
I suppose it really isn't much different than creating a newbie account just to bid... but private bids directly to the host can really screw up timing and sniping as they require the host to publicly repeat the bid.
Or how about if I made a private ebay-style proxy bid that increments to a certain limit, but at a minimum amount higher then the next highest bid?