That's a lot of questions, Geof. You're assuming a lot. Suppose someone just figured the price of a flat rate box (same price from 0-XX pounds.) Suppose others don't think of it the way you do.
Now, the price of bubble wrap is what? According to Walmart.com it can run a $1.96 for the smallest all the way up to $28.00 for a large roll of it. Who's paying the money to buy it? The seller. Who's making the drive to the store to buy it, using his or her gas? The seller. Even if it's just for the $2 stuff, some people won't reach into his or her pocket for it, because that's taking money out of the profit.
And isn't that the dirty word around here that everyone keeps tsk-tsking? "Profit?"
Now you have a situation arising from the someone who thinks it's all USPS's fault that parts were (or weren't as the case in this thread) received in the same condition as he sold 'em. Accidents happen. The idea is to reduce the risk of those accidents. Broken parts, lost parts, all because the seller thinks all he's responsible for is putting a part in a cardboard box, using a little tape (they'll tape it at the post office, don'tcha know?), and then sending it on it's way. Absolves the seller of all responsibility when he buys insurance.
The solution for this was simple: "Sorry, Bruce, I didn't package the part properly to ensure that it made it to you. I'll refund your money." And then began the insurance claim.
But that means actually stepping up the plate, letting his balls drop, and admitting that he didn't actually spend money on anything other than a strip of tape and a box to send it in. Right, that word "profit" again.
Considering he's screaming at the top of his lungs and saying it's all the delivery company's fault and that others are out to screw him because they've received broken parts, that's not likely to happen.
Given the above, he's unlikely to bite into his money to buy proper packaging material in the future, either, because that'll bite into his profit. That makes him just like the "flippers" a lot of folks on here whine about.