To answer you first question,,What makes a new car used ?
When a car is brand new,,and the odometer indicates zero mileage,,then the car is considered new.
As soon as the odometer indicates 1/10 th mile then the car can be considered " used ".
Used by who and used how,,who knows and who cares,,,.
As for the car being brought in from another state,,,does the car already have 165 miles on it already,,,will it have 165 miles on it when it arrives to the dealer from the other state,,and how did it get the 165 miles on it in the first place ?
Personally i would not buy a car that had 165 miles on it and that the dealer was trying to pawn off as being " new ".
Now if that car was sitting on a lot somewhere and racked up those miles during the time they were trying to sell it,,and knowing that the average test drive is about 3-5 miles,,then you can figure out just about how many people might have test drove the car.
Automobiles are first transported by train from the manufacturer,,then delivered to a Pre-Delivery center,,then they are shipped by truck to individual dealers.
Tell the dealer ( on the way out the door ) that 165 miles is not acceptable.