Didn't read all 26 pages but am a Used Car Dealer (rather large by the way) and we have bought and sold several S models purchased at the auction. So let me clear up a couple things.
First, the auction house does not purchase the vehicle. They are simply an intermediary. The Sellers are mostly car dealers that took the vehicle in trade (eg Mercedes dealer takes it in trade for a new car) or a wholesaler that bought it directly from an owner. Tesla does sell cars at auction that for whatever reason they choose not to retail, say for example an off lease unit that was in an accident and has a Car Fax showing moderate damage.
So yeah if Tesla takes the car in trade or off lease, they can strip the seats out, take the wheels off, deactivate all the software, whatever they want then send it to the auction. Doesn't matter what's on the Monroney. Tesla owns the car at this point and the price they receive will reflect the current state of the vehicle at the time of the sale. Perfectly legit. However what is not ok and borders on fraud in my opinion, is doing all that AFTER the car has sold. So Tesla is basically selling the car at auction with one set of highly desirable options, collecting the premium for it, then taking it from the new owner that paid the premium! That is theft!
But there is an unintended consequence that no one is pointing out. The guy who really gets hurt is the man who purchased the car new, paid all the extra money for the upgrades only to have those upgrades vanish at trade in time. Trust me, markets are efficient and in short order dealers will figure out that the FSD and other upgrades are going to vanish when they take it into inventory and they will value the trade accordingly. So new Tesla buyer pays all the extra money for a new car with FSD only to have a base autopilot when he trades it in.
The first loser here is the original owner who can't recapture the value of all the extras he paid for that Tesla is going to remove from the car. The second loser is Tesla. Besides all of the bad will (as well there should be) as the dealers, wholesalers, etc.. figure out what's going on, resale values will suffer, ultimately making it more difficult to sell new ones.