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Real estate agents have one of the tightest legislation about what they can and cannot do. Some agents are bad/dodgy but you will see them come around in a boom time. If an agent has been around for a number of years it is hard for them to survive if they continually do the wrong thing...

I would assume NSW has the same rules as VIC. A REA must present all offers to the vendor, unless they have been instructed otherwise. Yes even if you want to offer $1 for their $1M property they still have to present it. Although I am sure that the REA wouldn't take your offer seriously...

Very weird indeed, also weird the REA didn't meet with you to get the offer even if it wasn't going to beat the other. Move on :)