GSP isn't really that bad for buyers in Australia. Our import tax threshold is $1000 AUD, so if you shipped it via GSP, your buyer would only have to pay for the postage costs and would not be hit with any customs charges.
Cost wise, GSP postage is comparable to what individual sellers charge to ship internationally from US to Australia. I've found that the only difference is in the postage time (+ 1 week approximately) and also with the packaging (GSP items get shipped in a box with no padding or protection for the item, even if it was originally meticulously packed by the seller - rumor is that the GSP shipping company removes all that to save on weight...).
In regards to your question about what happens when a buyer decides not to receive a package due to customs charges, they forfeit their buyer protection on eBay, but can still file a case for item not received through Paypal and/or their credit card company, who will force you to refund the buyer. For that reason, I suggest that you use the GSP so that all customs charges are paid for upfront and there are no nasty surprises for you and your buyer.
Good luck with your listing!