Experienced members please chime in. I just want to resolve this and be on my way.
File a PayPal claim. Period.
PayPal shall instruct you on return shipping which shall require signature confirmation. Add that amount to your claim. That's the only way I see this to end, anything else will bring grief to the buyer. PayPal claim is a standard legal process established by PayPal to protect sellers and buyers - keeps seller in check and protects buyer from malicious seller. Dishonoring PayPal's claim results in ruining your credit score.
As for the seller - after the buyer has rejected your amended offer not in the original contract, I don't think you have a moral ground to put an end to stories! ;-)
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