I recently sold a bag and shipped it insured (for the amount paid) to Germany. The buyer just emailed me complaining that she has to pay duty. She is mad and is now going to refuse the bag and probably leave me neg. feedback. Has anyone else run into this?

You (as the seller) are not responsible for inner country customs fee!!!
If she's purchasing an item from US she has to become clear about the fact that she is full responsible for taxes. That's very simple.
If I am right she has to pay between 15-20% of the declared value - which shouldn't be very much at the moment (the EUR is at all time high at 1,45, please convert the amount yourself).
Ok, it's not so wonderful to pay taxes - who like to pay taxes? Hands up!!
To prevent from negative feedback: You can offer to pay her a little part for her expenses or to share the amount - but that's a good-will-thing - and I wouldn't recommend since it's not your fault at all.
