New Zealand's eBay clone - trademe.co.nz - has auto-extend for auctions where a bid was just received.. The auto-extend is only 5 minutes though.

This doesn't eliminate last minute bidders though - rather it just extends the period of the 'last minute bidding war' till someone gives up.

So. Its good idea, but you don't want a 3 hour auto-extend - 3 minutes would be better. 3 hours, as suggested, would probably mean many auctions would not end for weeks and weeks and would likely frustrate the heck out of bidders and sellers alike.