PayPal will not grant a partial refund through the resolution process on your behalf - with them, it is all or nothing, meaning that if they find in the buyer's favour, they will be instructed to return the watch (at their own expense) in order to receive a full refund of the original payment. 

If that happens, and you have any doubts or suspicions about the buyer's honesty, and they do in fact send you a package, don't open until you can do so in the presence of credible witnesses, preferably the police.