I couldn't agree more with this. I see players all the time artificially inflating their ELO because all they have to do is ensure they don't get stuck with the trash faction that they themselves put into the pool.
That loophole honestly makes Auction Factions a TERRIBLE variant. It's not Gaia.
Something needs to be done. I'm not sure if giving a zero-point bid a free pick is the best, because I don't think it will solve the problem. Like, what happens if people put two really bad factions in the pool? Maybe that second-worst faction gets a one- or two-point bid but then becomes the absolute worst faction because the other person got a free swap.
I wonder if the solution might be to give each player a ban beforehand. So either they can ban a really great faction that has a huge advantage, or they can ban terrible factions that they don't want to see in the pool. With 4 faction bans, it's probably very difficult to get a pool that's too imbalanced.
I just accidentally joined an Auction game after swearing off them and it immediately proved me right. This game: https://www.boardgamers.space/game/Menacing-picture-2540. I picked first and looked at the map and tech track and scoring tiles and figured that the Ambas have a pretty good game, so I put them in. The next pick? The Lantids. Unreal. The Lantids are already considered one of the weakest factions, and in this game in particular there are no obvious huge planet clusters, and two of their home planets are on the edge. Then the next person inexplicably chose the Hadsch Hallas over the Ivits, who would clearly be better. And then the icing on the cake is the Geoden pick. The Geoden's have three home planets on edges and a fourth just one hex away from the edge. It's a total joke. In this game, the good choices are clear: Ambas, Ivits, Terrans, Itars, Xenos, Taklons. But no, let's feed the bad factions in so I don't have to face any of those.