Yes but hurts the eventual buyer. The person that actually needs the item and is going to use the item. The undercutting farmers, and the resellers both make gold, the reseller makes much more with a lot less time, but both benefit from it. The buyer is the one that gets screwed, and it is bad for an economy to be so easily worked. With such huge supply and demand of one massive AH, this wouldn't be possible. The only real fluctuation in price will be due to fluctuation in ACTUAL supply and demand, which is how it should work.
Exactly! When the server population spiked at the end of TBC it was still possible, but only for as long as you were actively sitting there. If you went away for a half hour or so enough stuff would end up listed at the sane market demand price that buyers could ignore your overpriced stuff unless they really need a lot right now.
As far as the divisions go, I do expect we'll see a US East/US West kind of division, but even then those regions will still be significantly larger than a WoW realm (and I won't be surprised if there's no division at all).