Glad you found the problem. I assumed all along the transaction was there and it wasn't an error.
As for logic, it may not seem so to you, but quite logical for the buyer as it was a simple way to get back money. It may not seem fair, but it's a very logical approach for the buyer to get a refund as the buyer knows the system better.
If you check PayPal polcies for seller protection, I think you'll find that the type of transacton you did does not qualify for seller protection. That meant you accepted a high risk transacton; that might have displayed a lack of business logic.
Furthermore, you have no documented proof of delivery (official tracking number) so you would loose a dispute. But, you would also loose because fo the type of transaction.
My guess is there isn't much you can do, but you could call PayPal customer service and try; you will just need to be persistent to reach the best knowledgeable rep.
