Larry,
I agree with your scenario except for:

"Say your bid was $11.75 which bumped me to $12.00. I now bid $16.00. EBay will raise my bid to the proper full increment over your bid that they could not before, and I'll be at $12.25."
That has not been my experience. Every time I have been involved in the scenario you outline, the bid increment is increased based on the last high bid.
This is regardless of what the initial bid was and the expected bid increments from that point. In addition, in a proxy bid auction without a reserve EBay will not increase the current high bidders bid unless someone else outbids them. So if I were the high bidder at $12.25 and increased my maximum to $16.00, the high bid posted in the auction would remain $12.25. The bid would only increase when another bidder exceded my former high bid by the bid increment, say 12.75 which would push me to $13.25. This has happened to me many times.
Paul