There are a few ways but you're going to need help. You'll need to find at least a couple of people that are willing to invest a little time with you, because you're going to need help gathering resources and keeping the market covered. Four would be ideal, and if this guy has such a run on the market as it seems, surely he's made enemies.

You and your new group of auction house adventurers simply take the market and divide it among yourselves, taking up the responsibility of gathering and crafting as equally as possible. Once you have your stockpiles it plays out like this:

You post an undercut, but only 2-4 of the item.
Your competition undercuts you.
One of your partners immediately undercuts hir.
The competition undercuts hir.
Another partner undercuts hir.

etc

Eventually Mr. or Mrs. Mogul will get frustrated and stop undercutting. The trick is you really have to have help, or multiple accounts, that way he / she can see that you're still online. Partnering up helps with this, in addition to making it easier for all of you to keep an eye on the market.

A few things to keep in mind:

As Basil suggested try selling stacks of different sizes. For cut gems you probably won't sell stacks greater than 2 or 4, (most gear upgrades have only 1-2 slots).

Also posting for bid but no buy out with a short duration can help if you're afraid the mogul will simply buy you out. You don't want this. You want it to seem as though he has multiple competitors with endless supply. It's the only way to frustrate him.

It also won't hurt to have a little extra gold on hand as well, so that in the event that the mogul starts posting ridiculously low, you can buy this up and continue to repost. Just be cautious with this, it's going to be difficult to tell how much stock they have available.