If the seller had 'collection only' on the listing, that means collection by the buyer in person. You then trying to arrange a courier is a breach of the agreement that you would collect in person.
I imagine the seller thought dealing with a courier was more complicated than they were prepared for, it's very different to dealing with a buyer in person, and cancelling may be nothing at all to do with the amount it was won for.
"Problem with buyer's address" is the right reason to use when the buyer of a collection item lives too far away to collect, or won't collect in person.
Regardless of who breached what contracts, ebay won't care and there is no dispute you can open as you have your refund.
