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File a dispute first to start a dialogue with seller (or not, and just escalate after you explain your case for PayPal to step in and review the case):
If this seller provides a tracking number to try to win the PayPal dispute be prepared to get the tracking info checked out by contacting your post office and request a mail fraud investigation on that tracking number if you do not receive your order. File a police report too. Then provide all this info when appealing the dispute, if you do not win it.
You have not actually been threatened according to what you say but I get it it's not nice. File a dispute and also show them copy of nasty message. Please don't contact police they have enough to do right now.