Just got off the phone with Ebay =)...
Here's how their response went:
"We apologize for the inconvenience this may have caused you. Please send back the item with the return label that we will be emailing you."
"We grant you a full refund of $118 for grounds that the seller is a complete misrepresentation of how an Ebay vendor should be. He may have been been factual and may have listed the return policy in hindsight while you were in error for not reading the whole ad, but because of the lack of professionalism he portrayed we honor you the full refund. We will also take recourse action in penalizing the vendor further as we don't see this fit with our mission statement."
All I can say now is I'm happy, and definitely learned from this experience as a consumer and as a seller. One, be careful of what you buy. Two, never bite the hand that feeds you.
This dispute could have been won by the vendor easily, but since he went way out of line, the customer was right on this one.