Huh? I don't see anything about a 100% satisfication guarantee on the PayPal Purchase Protection webpage. Only if the item hasn't arrived or isn't as described does PayPal step in.
Regardless, forcing the buyer to cough up the money right after they win the auction avoids the hemming and hawing that the OP is going through right now. It also makes the buyer seriously think through his purchasing decision before clicking that "Bid Now" button.
The buyer in this thread is really hanging the seller out to dry. $h!t like this is what contributes to eBay's faltering reputation.
Paypal's very lax when in comes to buyers. A buyer can simply state that a product was not as described and literally give an excuse as petty as "it was dirtier than the picture showed it to be" and that would be good enough. I've filed a few paypal claims, that's what the rep's explained to me, it really does come down to satisfaction even though it's not explicitly stated. As far as the OP, you shouldn't feel too bad backing out of the sale, the buyer can always send a second chance offer to the 2nd or 3rd highest bidder. At the ~$900 price range, it's likely you won by $5, so it's really no big moral quandry.