This has got a bit silly now. The seller is clearly a bit of a wheeler dealer, so what? He bought the car a few weeks back for an excellent price and is trying to sell at a profit. From the previous eBay ad, the car looked well looked after and appeared to be being sold by a genuine person. This guy who sold it a few weeks back is the one who has been looking after it, using it, servicing it etc etc, not the wheeler dealer. You have an option to cancel, you have an agreed price, go look at the car as if it was just an advert on Autotrader. If you like it and it's sound, then buy it, if it's not, walk away.
There is no point what so ever walking away at this point as the seller has done nothing wrong. He isn't trying to get more money out of you when he mentioned the other bidder, he simply said something like, "thats fine, if you don't take it I have someone else to buy it." He would actually be happy if you dropped out, because if you did, he'd make another £100.
So don't run scared because of what everyone here is saying. Go look at the thing, it's most likely perfectly fine. The VQ35DE engine is pretty solid, so if there is anything wrong with it, you'll probably know it.