I'm sure some people do it. How prevalent it is we'll never know because those vendors don't tell you. The only "good" uses of Photoshop are white balance (many cameras do not allow manual white balance at 20000K color temps that some corals are kept under), cropping, and any other adjustments to give a more accurate representation of the coral. I use it only for white balance and cropping.
I agree with this. The use of Photoshop is not wrong if it is used honestly. Using it to make something look like something it is not is wrong though.