That's great news!
Do you guys know you are also covered by your credit card company in these cases?
I once paid for something that I never received, and the guy stopped replying to my messages on eBay. Opened a dispute on PayPal and they found in favour of the seller. So I went to the bank, told them I'd paid for something with my credit card and never received it ... filled out a form and Visa refunded me.
I did get an email from Paypal saying "You're getting a refund from us, don't do this." ... which I ignored ... and nothing more ever came of it from their end.
Just thought that might be helpful if anyone is ever in the same situation as Dr Grange, but has no luck with PayPal. You should be able to get your money back one way or another.