You have 99.3 % feedback, just keep the money and send paypal's dispute center all the info on the auction. Let them be the ones to deal with it. If you know you didnt rip the guy off, then who cares what your feedback says, 1 more negative isnt going to hurt your feedback with 140 auctions.
You neglect that paypal sucks and is working in the interest of profit, not the customer. I've already explained to Phil that he should just ask for the cards back and refund the guy's money upon recieving the cards back. There is a whole website paypalsucks.com were you can read about bad eBay experiences if you are interested.