Should I hold them to the price?

The thing is, I don't like that they tried to BS me by saying the auction was for the gaskets. If they would have been up front and said they screwed up, I would have no problem letting it go.

And this is the reason I think you should hold them to it. eBay reminds every bidder that they are entering a business contract by placing a bid - the same should hold true for the seller.
Business is business, you're not dealing with a family here or a private party.