Wow, I am really appalled at Stepbrother's behavior. Let me count the ways.
1) Didn't even know if your gift had arrived or not...
2) ...because they immediately traded everything back in for cash.
3) Which was their plan all along, hence registering for everything over $50 with no thought of actually wanting it.
4) Sounds like they didn't have any lower-priced items on their registry, either.
5) Boasted of this plan afterwards
6) Added that he doesn't want gifts of art anymore, because they don't have high street value when he resells them
Honestly he could have done #1-3 and no one would have known, if he hadn't also done #5. He could have said, "Yes, we got it. Thanks so much, it's great!" Because it would have been rude of DH to continue with, "But we didn't see you use it at the party!" Gifts are the recipient's to do with as they please, but the recipients are also obligated to not let the giver know they got rid of it, in most cases. Stepbrother shattered that polite fiction, and for no good reason ("Unfortunately we had to take it back, because we discovered we were terribly allergic to it! We won't be bringing anymore X-type items into the house from now on").
I would not be getting him gifts of any kind any longer. Of course I would be disgusted at his behavior and hurt by it; but more objectively, obviously he sees gifts differently than I do. We are not speaking the same language when we use them. If he has other good qualities, I would maintain the relationship by going to the movies together, Skyping, etc. but not give him presents again--maybe buy him dinner if we were going to be eating it together, but no tangible thing for him to take home.