Kronman can only ask for a type of shipping. It is all up to TT. If Kronman was insisting on the cheapest shipping, TT could have refused and placed the knife back up for sale. So yes, Kronman was wrong in asking, but it is TT who chose to ship it poorly. I understand that accidentally throwing a receipt can happen, but if you are shipping a $700 item to a foreign country, that receipt needs to be kept until the item arrives. I do not think TT is walking around with the knife, and I do not think Kronman would go through this massive amount of trouble to screw TT over. However, if the item is not in the buyers hand and the seller has no proof that he shipped it, the fault lies on the seller.
Splitting the cost of a new knife is unfair to Kronman, who has already shelled out $700 and has no knife. TT needs to provide a replacement knife or refund Kronman's money.