This is behavior unbecoming a moderator.

Crazily his behavior harms his own interests: if he interferes with my ability to re-rent then he is on the hook for rent himself.

The majority will leave for cheaper pastures but for those who want to stay and pay there is more than a little satisfaction in knowing that you have successfully 'taxed' their bad behavior. 

I've never been to an auction, but the bidding war mentality you describe is exactly the behavior which is warned against in a book I read about foreclosures a couple of years ago.

Nine more weeks of this problem (which may be short-term for you but is probably way too long for your downstairs tenant to put up with) could mean losing the good tenants at their renewals or creating more bad behaviors from all your tenants if they realize you're going to allow their behavior until the lease ends.

So I think you'll see prices change once behavior changes, but considering the volume of people it could effect: home buyers that have plans to move, and then the subset of that, homebuyers that have plans to move who's tax event is now changed because of the new law: would be minimal.

If you see predatory behavior, call it out.

Well, I don't have a PHD in philosophy, human behavior or economics, so I just don't feel qualified to answer that one!

I got so enraged over their behavior (long story) that I ended up putting up a web page devoted to all the crap we had to deal with from them.

Money is 80% behavior and 20% head knowledge.