Now I realize this thread is probably all bogus, but I'll post an answer anyway. I read through most of this and I can say that PayPal would have asked that the coins be returned to the seller and a refund issued. And if the seller did not issue a refund once the coins were received, a tracking number indicating that they were received would be all PayPal would need to automatically issue a refund to the buyer.
A negative feedback would not be removed by eBay unless both the buyer and seller agreed to have it removed. So that most likely never took place.