Wrap up update:
I opened an official "item not received" situation. The seller sent email asking how much was missing for full refund. I called eBay customer service, which to my surprise, I got to a rep with no wait. I explained the situation. She stated that once I have accepted funds from Paypal, the sender has no way to reverse the transaction and pull back the funds. She said that given the situation, I should be fine accepting the first transfer and requesting payment of the missing amount.
I accepted the first funds and asked the seller to send me the fees with the additional corresponding fees, which I calculated came to $3. The next day I received it and closed the eBay problem.
The eBay rep said the seller had the account blocked until this was solved. I supposed the seller must have learned something after having the account closed for days, although it is not a high volume seller. I personally think they guy that handled the refund screwed up.