I just used sniper to bid on an air-conditioner which was at $500. At about 1 min to go there was a bid of $555 which didn't worry me as I had 650 set as my max. 32 seconds after the bid for 555, snipe just put in 650.... why... I was outbid too in the last second... but the bid times don't reflect this...

You were outbid because someone else bid higher. The highest bidder wins.

You see your maximum bid amount, because this is how proxy bidding works.
Please check another forum thread for more information:
http://www.myibay.com/forums/viewtopic/2278/proxy-bids-and-snipe-can-someone-explain/