why do I get 'your bid was too low' when my bid was clearly higher than the winning bid?

It was probably too low due to eBay's bid increment system (you bid must be higher at least at some certain increment).

Please check the following FAQ section for more information:
http://www.myibay.com/login/faq/4/#q14

Can mybidder setup a safety so it makes up the difference automatically for ebays "bid increment" rule. So I don't have to lose to lower bids. I think people will love this feature when they stop losing to lower bidders.

Rezzen,
Why don't you just add 1-2 increments over your maximum?
The sniper does not know if you are willing to pay that extra. You are the only one who knows about it.