The "I reserve the right to cancel this auction at any time for no reason whatsoever" does not belong here. In the future if you include this in your list of auction rules, just click the little x in the top right of your browser before you hit "post".
As I see it, most people add this clause to secure themselves in case of something very problematic arising that requires the use of it. Most of the times such clauses are never used against common sense. But then when the clause is there, it can be used like Fattcatt did and it's technically alright. Due to social standards around here, not so alright.
So it's a double edged sword. Maybe it's best that we use common sense here, like with anything else. I wouldn't mind someone canceling an auction for no reason, using the clause,
once. After this the auctioneer must learn that it's not OK to do it, with or without the clause. So when it happens second time.... is what happened here.
All the more reason to contact the valid bidder(s), explain to them that a circumstance has come about.. post that all bidders have been contacted and okay'd the cancellation out of respect to the auctioneer, lock thread and leave it intact.
The only reason we know that Fattcatt included that clause was because of a phone camera snapshot.. Fattcatt effectively removed the necessary information that would have made this "technically okay" from a passerby's perspective.
But now looking at anonymousminer's trust page I can see that he should not be trusted (sarcasm) and I can no longer believe that the snapshot was not edited to include that clause.