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Difficult buyer - what should I have done

I just sold an N gauge trains set. It was a limited edition with a sequence number.

OK so far.

I had a second one, so I sent a second chance offer to the runner up bidder. I advised him that the limited set number was different (obviously) and that an internal plastic cover was missing.

He paid, after I sent him a shipped total and the package was packed and ready to go.

He them complained that the set number was different, the price he paid was more than his bid (it wasn't) and the train carriages would be warped form the sun because the plastic cover was missing! The box has been in a closet and its' lid was closed at all times. 

He proceeded to demand I accept $80 less than the second chance price (that he had already paid!!)

I made the decision that he was never going to be happy, so I told him I was voiding the deal and gave him a full refund.

Two weeks later he has posted negative feedback stating "the seller is a 3 second problem", whatever that is supposed to mean. I was surprised he could post feedback as the deal was voided.

I appealed to Ebay to remove the feedback based on his arguments AFTER the sale, but they have decided it does not qualify for removal.

My first negative in over 20 years!!

I'm beginning to think I should have shipped the item, let him post negative feedback at that time because I would then have had the message exchanges to show that there were no surprises and maybe Ebay would have removed it! 20/20 hindsight!!

What does everyone else think??

What SHOULD I have done?

 

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