Okay. Two problems I can see with this idea is that it will drive the prices of said items down on the auction house globally, and depending on how common it is could end up getting to a point where it's not even worth the time putting it on there. The second problem is: is there actually be any real need of this? The game's community isn't divided up in the traditional sense of servers so amount of players putting items onto the auction house should never get to a point where there is just too few auctions being made.
It's a cute idea, but I think it would be better if you wanted to involve the NPCs with business and not just be there as a rubbish bin would be to allow them to sell your old stuff on their shop shelves. Which while it isn't too much of a different idea overall, it would fracture the business relationship that the player has between the vendor and also the auction in your idea in the sense that it's not listed on the same window as costing X amount and this other big that is made by the player is slightly higher or lower. And even perhaps offer a work around system if there is a Bind On Pickup type of system in place, the shopkeeper could instead sell you a BOP weapon at an inflated price but maybe even be limited to the magnitude of how good of a weapon can be sold and how many per day. Plus it could loosen the hold auction house has on business within the MMO space. Kick that idea around in your head for a few minutes.
But really in truly there isn't any need to have either idea in place. But concepts for evolution might produce that need.