Ken, I sympathize with you. Having just had a similar issue resolved with you, I can certainly vouch for your good faith.
However, I can understand the seller. Had a similar issue with Minh Quy recently where he sent me a dial I was not happy with. I posted my concerns on this board. Although most felt MQ was a stand-up business man and would follow through,the majority were of the opinion that if I felt uncomfortable, I should go the PP route. At the end of the day, we are dealing with strangers oceans apart! He was also stuck in the same boat - send me back my dial first. I was , send me your new dial first. In the end, MQ did follow through. I never used the dispute mechanism but did mention it in my exchange with MQ that I was thinking about it.
It appears your seller did not even mention it prior to. In the end, you have to weigh all the facts. For me, both KB and MQ are reputable and do high volume of business through our word of mouth. Any negative perceptions could have lasting repercussions for both the buyer and seller. You go with your gut. On my thread posted just a few weeks ago, someone said, "dispute it if your gut tells you but you will never do business with MQ again!" I already have my next purchase from him lined up!
Good luck!