I hope I haven't read this wrongly, but as I see it this is the basic issue.
1) Customer orders product(s) and pays up front.
2) Seller can't deliver product(s) and offers refund.
3) Customer refuses refund and demands products which the seller says he can't deliver.
4) The rest is just an attempt at human to human contact where both sides are not able to see eye to eye.
In my opinion the customer is being unreasonable in his demands and threatens with the tyranny of "bad feedback" if he can't get his way. The seller should refund the buyer using a certified check and move on. Screw the bad feedback!
I agree in general with 1-4, but I think 1 and 2 more than qualify the seller for bad feedback which he should receive.
Everything after 2 is a waste of time.
Once the seller came clean and said he could not deliver, a full refund was the appropriate resolution. Demanding something that could not be delivered fits the definition of unreasonable IMHO, and at that point the refund should have been given. With or without consent.