Oceanside Blue,
Your advice about doing due diligence before 'pulling the trigger' on a purchase when buying to resell is spot on. I would point out that sellers should do that regardless of whether they are buying from Alibaba.com or some other source. It's just good business practice. Sourcing from overseas vendors can be very profitable, but one must do your homework as you correctly point out.
AliExpress does offer escrow service like you mention.
I don't mean to minimize the problem you report that you experienced in any way, but you indicate that it occurred in 2007 which is three years ago.
A lot has changed since then, and in all fairness, Alibaba.com is constantly making improvements on their sites and have made great strides in reducing the incidence of fraud among their sellers, and are continuing to work diligently work to stamp out fraud as much as possible.