E.g. if we have this order stock:
And trying to buy 3.5 bitcoins for a price at $76.5 (higher than available prices). How will Mt.Gox select matching orders? Will it select the cheapest possible lines (1)&(2)? Is this equal to a market order?
Of course it would select the cheaper ones. It's a limit order.
Yes, it works like a market order that stops moving up at $76.5 that will always fill you on the best possible prices on the way up.
Professional traders actually use these kinds of "synthetic" markets orders most of the time, because market orders could possibly fill you at a price that you wouldn't want to get in a fast moving market. This is especially true with laggy exchanges like Mt. Gox.
