If the buyer doesn't respond in time then the case will eventually time out. If that does indeed happen and you were paid cash on collection for the item then the buyer will not have the option of opening a PayPal case against you, as PayPal won't want to know if they were not involved in the transaction in the first place. Therefore, just sit tight for the moment and wait to see what happens. If the case times out and you were paid in cash for the item then the buyer will have no further options with regards to trying to force you to refund the money for the item.
Going forwards, if you list an item as Collection In Person Only then stick to those terms and do not let the buyer wear you down until you agree to post the item or allow collection via courier. By agreeing to purchase an item that is listed as Collection In Person Only the buyer is, in effect, confirming that he/she has agreed to pick the item up in person and does not expect the seller to arrange for postage of the item or for the item to be collected by a courier. If you get any other potential buyers in the future asking if they can arrange a courier for a Collection In Person Only Item then add them to your Blocked Bidders List. If, on the other hand, somebody commits to buying something that you've advertised as Collection In Person Only and then contacts you after committing to purchasing the item with regards to arranging a courier then cancel the transaction and refund the buyer's money straightaway, citing "Problem With Buyer's Address" as the reason why. Make sure that you issue the refund via eBay so as to avoid picking up a defect on your selling account. Once you've done that add the buyer's User ID to your Blocked Bidders List so that he/she cannot purchase the item again should you decide to relist the item for sale on eBay after you've cancelled the transaction and have refunded the buyer's money.
