The buyer wanted to pay by paypal and then collect an item in person. At $250 I would not accept this as he could just go home and claim non reseipt of the item.

You should have explained that there is no PP protection for pick up items.  As long as it was obvious that the item was picked up = no postage charged, then they would not be able to claim on PP.

Maybe not a paypal claim but the buyer could do a bank chargeback if he funded the paypal payment with a credit card.

So many times we'll get the buyer say "oh no I don't want another one, I want a refund" Of course there's nothing we can do because if we refuse Paypal refund anyway after they open a non-reciept of item claim.

Of course there is something you can do, you can send a replacement with valid proof of posting, either registered letter or click & send parcel are the most cost effective services. Supply Paypal with the tracking and the buyer ends up with no refund, they end up with two of something but if sending the replacement costs less than the item cost you to buy plus the delivery charges you are still better off.

If a buyer is trying it on and it is them who have used the claimed fraudulent use then very often a request that they make payment immediately or they will be reported to the police works wonders however if the chargeback is for faulty or not received goods then the cardholder is perfectly entitled to initiate a chargeback if they do not wish to go through the Paypal dispute process. For damaged items the bank will usually insist, just like Paypal,  that the item is returned.