I don't agree at all the undercutting ruins the market. As someone who has been working in the glyph market for awhile now undercutting is just part of the game. The thing is to not be obnoxious about how much you undercut by.

I've found on my server there are about 2 or 3 major players in the glyph market and a handful of smaller players. We undercut and get undercut numerous times each day (5 or 6 or even more) on hundeds of auction at a time. The trick to undercutting (and keeping a healthy market) is to undercut by a very small amount. In the glyph market I undercut by 73c. The thing you want is to be on the top of the list (lowest price). If I'm 73c lower then people will by mine.

If I keep the undercut amount small (and so do my competitors) then the market value drop happens at a much slower rate. all of us in the glyph market are in it to make money and it's in out best interest to keep the prices at a higher (but reasonable) level all around.

That said even in the "regular" market I undercut by only 1s. No reason to go higher than that. The normal person searching the auction house only cares which item it at the top (cheapest) not how much cheaper it is.