Is this KittyCats business model

[Ivy Norsk]

To take things in order:

The 20-box purchase does offer a discount over the single or 5-box purchases. I don't remember what it is, but it's there. There's no question that the cats are addictive and the kibble bill adds up. That is what it is. It's a pay-to-play game and the mechanism is kibble.

Regarding Collections. Main Limited Edition Collection releases are pretty much always 3 weeks. They are released in the middle of the month, and then extend over a turning of the month since people often upload lindens on the 1st of a new month. This may vary a bit here and there, but 3 weeks has been the standard release time for years. I have heard the CSRs be coy about this, and say "oh we don't know", "we'll find out later" etc. But year in and year out, it's generally 3 weeks. This may not apply to other collection releases, event releases, various and sundry miscellaneous cats.

None of this could be called bad business practice or dishonest.

Next thing: the secondary market. KittyCats is not in control of nor involved in the secondary market. You have to remember that people "do" the hobby in different ways. Some people will buy extra Collection cats and hold them as an investment over the long haul. That's a multi-year strategy.
Other people are breeding the collection cats to find out their hidden traits and they resell them - as you've seen - when they know the traits. This stage lasts only a few weeks; it has no impact on the first people, since they are playing a longer game.
And of course, there are many people who buy the collection cats because they are cute and they will keep them as pets.
Again, none of this is dishonest.