People get upset with undercutting because of the misguided reason. Your stuff isn't going to sell faster because you put it up for 20k less. You're just giving it to the guy with 100,000,000 gil already for cheaper. In reality, all it's done is lowered the price for that item until all items at that price are bought out.

Yes. At the end of the day, the goal is for *my* stuff to sell. If someone else is selling something like the Cape of Happiness for like 900k, I'm absolutely going to slash those prices down to 300-400k because I know that more average players will be able to afford and buy more at that price.
This is probably not how that works. I can almost say with certainty the people who are buying at that price are putting it right back up on the market to make a quick 500k.