Kevin,

Since you made a proxy bid of $10, if someone makes a $5 bid on the item, eBay will essentially make the next bid on your behalf, which would be $5.50 if the increment is 50 cents. It doesn't matter if the bid was made in the last few seconds of the auction. What eBay means by earlier bids of the same amount taking precendence is if you have proxy bid of $10 in and somebody puts in a last minute bid of $10, your bid would take precedence.

That's just my opinion, I could be wrong.