Editor works with authors on a proposal. Editor describes structure of this type of book, helps them with format and content of proposal, gives great and copious advice on how best to pitch and angle the book. Authors submit final proposal to editor with note saying "also submitted to [rival publisher]".
I don't mind simultaneous submissions, but using an editor's time and experience to develop a proposal for another publisher is appalling. Even if the publishers both approached you at the same time, you have an obligation to either disclose the parallel submissions at the beginning, or find some other way to prevent one publisher being used to develop a proposal for another.
Hrmph ends.
--Nat