Do not withdraw the PayPal claim until you have the refund in your PayPal account. She is trying to con you. Ship the bag back with signature confirmation, and if she does not refund your full amount, escalate to a claim. If you have already escalated to a claim, let her know that you will not back down until you have all of your money back (including original shipping charge). Also, please don't do anything yet regarding mutually withdrawing from a transaction so that she can get her listing fees. She knows what she sold you. It's horrible that you have to go through this, but wait on your full refund before doing anything that she asks of you.
This is where I'm confused. Right now I filed a paypal claim (haven't escalated it to a dispute yet) I read on paypal's site that once the seller refunds the money the claim automatically closes and you can't reopen a new one so what if she only issues me a partial refund, will the claim automatically close and I'll be stuck with only a partial refund?