Legend, as usual, you are the voice of reason. This is not nearly worth the future problems and frustrations that will stem from opening a Paypal dispute.,
I have not one scintilla of doubt that Ezio packed that watch in the package and mailed it off to the buyer. I don't know the buyer, but it's hard to conceive that someone would risk reputation and forum(s) membership over a 350.00 USD watch. However, the human animal never ceases to amaze and disappoint me.
One thing that I do if at all possible is to insure the package for it's value. Also another reason I prefer to sell within the CONUS as packages can be insured and there are no customs, duty drama attached. It may cost me a few dollars extra to insure a package for 4-5 hundred dollars, but it sure increases my peace of mind..
I agree that a 50/50 split would be the fairest and most logical solution to the problem. I would also file a theft report with the post office, especially if the package shows any signs of tampering.
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