Question 1: any idea where do these people go? - I think people are going to a variety of places. Some will sell on Amazon. Some will have moved to their own websites. Some will sell on iBid or iOffer or Trading Post or Bonanzle or Oztion. Some may have decided not to sell any more.
Question 2: does this translates to overall lower level of buyer's willingness to bid or seller's willingness to list quality items? - Yes. I think this is actually one of the most obvious results of people leaving eBay - the lack of quality of items which sellers are willing to list, and the lack of quality items on which buyers can bid. I also think that a "grab a 99 cent bargain" mentality has destroyed a lot of sellers, and it's affected a lot of buyers; the buyers keep looking for incredible bargains that don't represent the real world, real value, etc. It's not true of all types of items, of course, but I can see a definite effect with items on offer online.
Question 3: from a seller's perspective, what is your opinion on sniper? - Well, I'm a buyer... so I can only say that from a buyer's perspective, I love it. If I were a seller, I think I'd also appreciate it, as it lets people decide in advance the MAXIMUM they would be willing to spend on an item, and place their bid well in advance. If two people have a realistic view of the item's value, the snipe ensures a last-minute good price. However, it has meant that bidding wars are much less usual now... which I suppose is sad.
Question 4: if you list a rare and probably valuable item, how do you ensure the keen buyers know about your item? Do you do anything? - I haven't listed things on eBay myself, but I suppose I'd want to create a "presence" online, by writing articles on specialist websites and including the link to my listing, advertising my items everywhere I can, including detailed information and fantastic photographs. It might be good to advertise items in a specialist collector's magazine, if that's possible.
Question 5: Quite often seller start auction at $0.99 and let the market to decide the fair price. Fact is, many times the final winner didn't have to pay the max amount he/she is willing to pay. As a seller, what did you do to legitimately maximize the closing price? - There isn't much you can do legitimately. If a seller starts an auction at 99 cents, he/she has to take the risk that the item won't go any higher than that. I'd be in favour of a more realistic starting price.
Question 6: why do you think it is OK to accept paypal payment from overseas buyer? - If a seller doesn't have a merchant account, the options for receiving payment are limited to third-party payment methods such as PayPal, Paymate, Google Checkout (if you're in the US), Worldpay, etc. You can ask overseas buyers to transfer money to your bank account, but they will certainly have to pay a fee to do so, and they may be deeply reluctant to transfer money bearing in mind both the fee and the relentlessly negative marketing push that has seen bank transfers called " unsafe" by PayPal and eBay. You can also state you'll accept cheques, but there is a lot of hassle in having overseas cheques converted. International money orders also cost money. Cash in the mail is terribly risky.
By far the best option in my opinion is if a seller can accept a credit card payment - but if he can't, then PayPal is one of the few ways in which to pay conveniently.
I still consider PayPal a risky payment method, but I do use it when purchasing from overseas sellers. I'm more reluctant to use it for purchases within Australia. I WILL NOT accept payment for my CD or for sheet music or for performing or for web hosting/design by PayPal. I have a merchant account with my bank which means I can process credit card payments, so I know how easy it is to do this and how very reasonable the costs are.