I understand what is going on here, in that all the years you have been selling, you have been only charging exact postage & meticulously refunding if postage ended up being a little lower than expected. So you've been hurt when a fellow seller hasn't done the same and in fact  charged you more than double the actual postage paid.

I haven't gone in to look at the ad but from what others have said, it didn't promise to send in a box, just mentioned a box would add considerably to postage costs, which it would.

My first thought when reading your post was that sellers are entitled to add a little bit to postage costs to cover actual  expenses. Bubble wrap, tape etc are not free. As a seller, we usually did that unless the item was going in a prepaid satchel & was unbreakable etc. In that case, we charged exact postage.

As a buyer these days, I often find I am charged slightly more for postage & I am okay with that. Never have I been refunded and I don't expect to be. I actually don't think you should be refunding people either. If they agreed to pay eg $12 postage & it ends up costing you $10, forget it. The only time I as a seller would have considered a refund would have been if we had grossly miscalculated and charged  the buyer way over the real expenses.

Now as to your present case. Without seeing your parcel & what extra supplies were used, it is hard to say what a 'fair thing' for postage would have been. But I do think that the seller was....  foolish for charging you over double the cost of actual postage as that never goes down well. 

The fact the hat was damaged is more concerning & I believe if this was the case then you could have put in an item not as described claim.

Unlike others here, I did  find your post interesting because nowhere can I see that the seller actually said in the message that they were adding paypal fees etc to postage. In your post, you say they wrote they can add costs to postage to cover their costs.

That could be interpreted to mean costs such as bubble wrap etc

So I am wondering why ebay refunded the extra to you. 

I suspect the others are right & the seller should have written it was just packing & handling costs but I also suspect that what may have swung ebay your way was the fact that the postage charge was so far over the actual cost. Extra packing materials on an $8.30 item are unlikely to come to $11.70, & I'd say the ebay rep was suspicious the costs were indeed ebay & paypal fees.

Your post would not be a lesson to sellers to only charge exact postage costs but it is a lesson on how to respond to such a question & also, I think, a reminder that it probably makes for better buyer perceptions if the fees are hidden in the item price.