"The reason I mentioned that things can be easily miscontrued as feedback extortion (and suggested there may have been something in the message exchange that the seller used to claim FB extortion), is that you mentioned the seller first refused to pay return postage and that they were difficult, which suggests something changed in order for them to agree to pay it."

Nope nothing in the message that could be construed as extortion.  The seller tried to make me pay for return postage and I replied that Ebay found in my favour and their policy requires the sender to arrange or pay for the return.  He accused me of being unreasonable for not agreeing to pay for the postage but it ended there. After a long absence he then replied to my message saying please send the CD back and agreed to pay for the postage - so I sent him a request through pay pal, he paid and I sent the CD back.

Btw, I just received another reply from Ebay saying that they have this transaction on record and they will take action if the seller does it again.  They did not answer my specific question on which Ebay policy do they think I breached nor agreed to escalation.  I replied not good enough, please escalate to someone higher in the hierarchy and please provide the answer to the question on what policy ebay believes I breached.