i just read through this whole thing. I recommend you not even contact or reply to her at all. she continues to say she will pay you but can't pay you now, etc. however that is not your problem. paypal will reduce her acct to a negative $800 and anytime she gets a sale it'll go toward that negative until paid back. you, however, will get your $800 in full at time of proof of return (def insure and use signature confirmation). So, her going on about needing time to get the money, needing to sell more to get the money, her vet bills, etc. None of that is your problem or anything you need to discuss with her. You will get the money in full if deemed by paypal and then it's her problem to get her negative paypal balance up to paid.
also, she is accusing you of damaging the bag. that damage is a result of wear, obviously, not someone slashing a bag with a knife or anything. it is worn down and that is why it's ripped, so her claim is just bogus, and anyone looking at the pics can see that.
for the most part, i'm fairly certain ebay will side with you, so no reason really to engage her at this point. and any and all messages sent privately, i'd delete without reply.