Yeah, I think you should say who this person is, or at least let him know about this thread. If people are paying for this, and it doesn't work, and he keeps doing it knowing it doesn't work, he could be arrested for fraud! I would offer my services as an expert witness at the trial. :-)
If you are going to have a site like a directory, you can have tons of links and I think it does work. But having tons of links to one site is only going to benefit the site you link to, if there is any benefit at all...!
Yes, if you have broken links on your site, this is not good since it is the sign of a lazy or "bad" webmaster. :-)
If you are going to create those Auction links yourself, you will have to update them. A better idea might be to sign up for Auction Ads and you won't have to worry about the updating. Take a look at how we are using them
here.
But AuctionAds also don't add any content to your site. So you should consider adding news from press releases, RSS feeds, or using an API to pull in the content.
Associate-O-Matic :: Build a custom Amazon.com Associate Store with 1000's of items in minutes uses the API to pull Amazon content and there should be something like this for ebay... I have something I found somewhere, but it is for a Windows server using ASP.
Free eBay software, ASP eBay listing software
I may have something of the same problem with EbayAuctionAds.com in that I have build the site around no-content affiliate links using AuctionAds, but I have created some other site pages and added a blog that I keep updated.