Can't help you out on this one but word of advice.. in the future, I wouldn't threatening pulling the paypal. Just work with the guy and he if he pulls shit like this, file the claim.
I had a deal go south with a dude a little while back. He shipped me the wrong stuff and stopped communicating. I filed a claim with paypal, they sided with me. When they went to retrieve the money for the dudes account, it was empty. Paypal sent me a note saying they couldn't retrieve the money and that I would have to wait until funds showed up in the guys account before they could help me out. Low and behold, the money never showed and so I never got it back.
Just trying to help ya out for the future.