Sending him money was a really bad idea. Now he can keep that and get refunded via paypal (with your funds).  Ebay and paypal will not see that you have already refunded him.  You had better hope he does not escalate.

Whay you should have done was say return for refund in the case. He would return tracked at his expense and when it showed attempted delivery he would be refunded from the paypal payment.

If you have not done say say in the case return for refund.