The problem with starting an auction site is that in order to get decent bids on items, you need to reach a critical mass of user traffic. eBay was the right idea at the right time and had the added Benefit of Pierre Omidyar understanding how to market a website through banner exchanges, etc.
Most of eBay seems to be on "buy it now" except for certain categories, like "used laptops" that still generate a substantial amount of traffic. It is difficult to list an auction on eBay these days and have it end at a decent price. It might work for rarer items, or for very popular items, but it no longer works for your average item.
Many sites have tried to emulate eBay and most of them failed. Amazon did auctions at one time, but they could not come close to eBay's results, so they stopped. Yahoo auctions is dead, and so is auctions.com. MSN, Lycos, eXcite and others who also once had auctions on their sites.
A few have had some success, such as Etsy, RubyLane, iOffer and Bonanza - although none of those has reached the level of success that eBay has.
Today, the only way to start a general merchandise auction site and make it successful would be to have a large amount of easily directed traffic, a ton of money for advertising and a level of trust with consumers. In other words, Google might be able to pull it off, but virtually nobody else could. And Google has stated several times that they have absolutely ZERO interest in starting an auction site.
I COULD see a smaller player being successful, but they would have to find a niche. I'm not sure if any of these would be legal (in fact I am almost sure they would NOT be) but a few that come to mind are GunAuctions.com, DrugAuctions.com and HookerAuctions.com.
Many sites, like Sears and Newegg have started their own marketplaces, and those may turn out to be successful, but probably not in the same way that Amazon's Marketplace has for Amazon. The fact is, the first company to launch an idea and do it well usually wins the majority of the market share. Yes, if another company comes along and does it a lot better, they CAN overtake a dominant player - kind of like the way that Google overtook Yahoo in the search engine space. But it has to be a SEA CHANGE, not just a few tweaks.
Re: Online Auction House ItemAuctions.com 
