Hey guys first and foremost you all rock, thanks for the support.
Just woke, angry, decided to give paypal a call to speak my mind. Had absolutely zero expectations of any action to be taken, but obviously Kim is a reasonable person. She told me she will be crediting my account for the full amount (she first said half but changed to full). Cant believe the big guy actually listened to the little guy, quite refreshing I must say. That said, my faith in paypal has been restored but this little weasel is still out there with free knives, that makes my skin crawl. I do not think paypal going above and beyond should erase what he has done.
eta-Had intended on contacting mail fraud and local LEO today but not sure if I have that right now that I will be made whole?