Another Ebay transaction problem? You sure do seem to be unlucky. Refusing delivery is foolish and it takes FOREVER to get back to the seller. Accept, follow the rules, and ship it back when Paypal tells you to. That is the best way to get through any dispute as quickly and pain free as possible. Good luck!
I would definitely not refuse it! I sold something a year ago that the buyer refused (we agreed on a return after I sent it and they decided to just refuse it to save on shipping). I never got it back and there was no tracking etc to find where it was lost. It was a huge hassle and in the end the buyer was the one who was out the money since they refused it and went against ebay/paypal rules. Just pay to ship it back...that way you are protected too!