I think shafri's analysis is correct, the real pricing would probably be $2.50-$3 for the displays and $1-$0.50 shipping. But they have to pay eBay fees over the item price but not (or less) over shipping costs, so it's profitable to shift as much as possible to shipping. It also lists higher when sorted by price, and people may not notice the shipping price.
They explicitly state that they can't combine shipping with a bullshit excuse (max volume/weight? really? for a few displays?). Any costs they have: transport, packaging, handling, shipping will be less for combined shipping, so they probably make more on one order with ten displays compared to ten orders of one display. I would just treat them as $3.50 displays with 'free' shipping, and see if that's a good price for you. The dishonest behavior would also make a bad impression on me, if they're willing to cheat eBay to save a few cents, how are they going to treat their customers?