This is actually quite a big problem on eBay where sellers mis-categorize deliberately for better search placements. For example when listing an iPod shuffle for sale recently, i noticed the "iPod Shuffle 1GB" category full of listings of cheap chinese knock-offs.
Apart from hurting genuine sellers, this also confuses the buyer and many new buyers also end up being cheated. I personally report all such items to eBay i come across when listing my own items and i request all sellers to do the same.
With a little cooperation and swift action from eBay's side, we can reduce this issue.