Currently the Auction House takes up a huge chunk of server load. It's probably not in SE's best interest if they were to increase that load. They were already worried about the load a simple additional few area's to /yell would produce, let alone constant interaction with a database that now not only has a hard cap of 7 items per person, but can now suddenly hold up to 100+ items per person. Each with diffirent timers counting down, diffirent prices and other such nonsense.
While you certainly have a point, i'm also afraid the influx of things that would otherwise be npc'd would quickly depreciate the value of nearly any item put on the AH. Once the items now commonly being farmed for gil get their price ruined, no one will bother farming them anymore, which will in turn make a lot of equipment that has those items as ingredients unavailable.
While certainly convenient if you're power-rushing through crafting, a good number of the items up simply wont sell. And then there's the relisting fee too.
While that is all minor, i'd be dead set against automatic sorting. You can sort things yourself if you like. A lot of people like to browse through ingredient lists in alphabetical order, yet want weapons and gear sorted on level. Or inverse order. Or any of the other options.
Simply making things auto-sort is going to make a handful of people happy, while it would probably piss off an equal amount of other players. With the low playerbase of XI, and the failure of XIV, i really dont think they want to piss any additional players off.