A .com domain I was watching has expired this week where it would
regularly go into Redemption Period then Pending Delete but two days
after it expired a .au Registrar who was obviously the reseller has
renewed the domain but made themselves the registrant where previously
the registrant was a Australian business.

Is this even allowed?

I don't mind competing with people for domains but how can anyone
legitimately compete when registrars are using their advantage to
secure domains for themselves outsuide the regular process.