Where is this seller located?;-) That's a rhetorical question.
The way ebay sets up listing with variations, - which is what you describe, - the cheapest price always shows up no matter what the picture the seller has posted. Although sellers really ought to group 'like' items together, preferably similar or even same priced ones.
Your seller is not alone, - if you do a Search with just the word "dress" and category "Clothing", pick the 'Buy it Now' tab, - you'll see just how many are doing this. They show a dress, fancy wedding gowns too, but include items like a shoulder strap, - so that it all looks like a 99 cent dress. Why anyone at all would ever buy from a seller like that is beyond me.
Anyway, if you want to read what ebay has to say about Listing with Variations, and how sellers do it, and what is expected of them, there's this:
http://pages.ebay.ca/help/sell/listing-variations.html#variation