To my understanding, AuctionSniper should work with the proxy system of eBay so that the bid of the snipe attempt will be less than or equal to my specified maximum bid, unless the auction is a Dutch auction. I have encountered a situation, on my very first snipe attempt, where the system failed to work, and it has made be just a wee bit wary of the auction sniping approach.

Take a look at this ended auction: http://offer.ebay.com/ws3/eBayISAPI.dll?ViewBids&item=4022569046

See me up there with the $100 bid? That was the maximum bid I had specified in AuctionSniper. I know I would've lost anyway, sniping or no sniping, since the guy that won was obviously willing to pay more than me. However, what I want to know is why my bid registered at the full $100 instead of one increment above the previous high bid of $21.56. There was no reserve price on this auction, nor was this a Dutch auction, so there should be no reason why the price jumped like that. What the heck?

I think it's because, although Benjis bid only shows $21, his max was much more - your $100 was needed to be ahead of his max. But I'm sure the experts will tell you!

Yes I agree with 6flb.
That's the one thing with this sniping lark, is you will never know what the other bidders top max bid is.
Therefore the current bid may appear atificially low but the actual max proxy bid of that other bidder is much higher and leads you up a blind alley-so to speak.
This of course will work to your favour as well- so keep trying-I have won more than I've lost approx 10-1 and I'm just a beginner!

Yes, AS does work with eBay's proxy system. AS sends your max bid and it's eBay does the proxy thing. As long as you are outbid, the bid history will ALWAYS show your max amount. Here is the bid history shown a little differently.

The following table has been reorganized and sorted into date order.  First
bid placed is line #1.  That should make it easier to follow the auction.
Two additional columns have been calculated and added.  They are the current 
bid and high bidder, as displayed on eBay after each bid is placed.        v2.1.08
* = Winning bid. (may be less than actual maximum entered.)
 
                     Max                        Current Winning
  #    Bidder        Bid      Day & Time         Bid  &  Bidder
                   (US $)
  1   jenandmick    10.95   05-Jul  11:08:04     9.95   jenandmick  
  2   netscann      11.00   09-Jul  12:06:27    11.00   netscann    
  3   mr_colliwob   21.05   09-Jul  18:00:57    11.50   mr_colliwob 
  4   benjishouse   15.00   09-Jul  18:17:45    15.50   mr_colliwob 
  5   benjishouse   20.00   09-Jul  18:18:25    20.50   mr_colliwob 
  6   benjishouse   21.00   09-Jul  18:19:07    21.05   mr_colliwob 
  7   benjishouse   21.56   09-Jul  18:19:41    21.55   benjishouse 
  8   xhmeng       100.00   09-Jul  18:19:55    22.06   xhmeng      
  9   eotrwebtv   *102.50   09-Jul  18:19:56   102.50   eotrwebtv   
        End                 09-Jul  18:20:02              

If eotrwebtv had not bid you would have won for $22.06 !!