I just want to chime in and say I think that some people may be misinterpreting the rule on when feedback can or cannot be left. The rule states:
In this case (without commenting on the merits of either side), a deal did happen. The knife was paid for and shipped. A later reversal of the deal does not change that.
Note that the rule used to be more ambiguous. The second part of it stated "As long as you're not out any items or money, move along," or something to that effect. The problem with this earlier wording was that it could be interpreted to mean that you weren't allowed to leave feedback in a situation where a seller took your money, intentionally never shipped the knife (i.e. defrauded you), and forced you to resort to PayPal for a refund. Since you weren't "out any money" at the end of the day, no negative feedback allowed, even when someone scammed you.
This was pretty quickly understood to be an inadvertent omission in the feedback rules, so the rule was amended to try to clarify that when money changes hands, feedback is allowed, even in situations where the buyer or seller is eventually "made whole."