Kevin,
You are wrong, what Bill did was not illegal in any way. Period. It is also a lie that his listing said absolutely anything about how the stamps might used. Here is the listing

According to USPS it is illegal to reuse stamps, but selling used, un-cancelled stamps on
ebay is not illegal nor is it against the rules. I concur that ethically it is questionable. At the time I discussed this with Bill, he concurred and removed the listing. Clearly his brain cancer, chemo, and urgency to not burden his family with the disposition of his stamp stuff was influencing his thinking.
Don