Just to play devil's advocate and I'm not attacking you here since I know you're a long standing member like myself but what proof do you have that's he's lying? I'm not saying his actions after the fact aren't shady as
but unless you have concrete solid evidence to back up your claim to paypal that it left your hands working and if it's not now then he obviously did something or something happened in shipping that could claim against the shipping company for then I think you're SOL.
At the end of the day paypal is setup in such a way that unless there is a TON of proof it's a scam the buyer will win in about 99% of cases. I would say if you really want it done and over with show him that a parts kit is $15 and offer that as a refund amount and be FIRM!. If he refuses then HE looks like he's being unreasonable to paypal.
If he refuses the $15 then I'd say might as well escalate it and have paypal sort it out. Since if he refuses the $15 that is reasonable and keeps demanding $30 all the while looking to be able to sell the supposedly "leaky" valve body (which I've no idea how the valve body would leak it's just a metal shell really and as long it seals the leaking can't come from there) then he's an idiot. With that said we're just hearing your side of it I'd say before being able to give you a straight concrete answer we all have to know what was said in the PM's