One solution might be to return to a mutually trusted intermediary. I may have missed something, but as I understand it the OP was offered a full refund (great) if he returned the watch, at which point he'd get the actual refund. So it becomes a bit of a timing issue in terms of trust. The OP also gave an original option of a small rebate. I haven't seen the original sales thread, and everyone from here to Kathmandu knows Hike is a stand-up guy.
It will be taken care of I'm sure, I reckon just take it to PM.