Yes, the moment she pays with PP  the dispute will be automatically closed; if she pays by other means you just close it selecting the "buyer paid" option.

But, i would not let her to pay by PP without paying for the postage.  If she pick it it up, you have no proof of posting and she can claim she did not get it.  You can get her to sign receipt that she collected and take down her car rego number, that would be good enough to report her to police for fraud, but not good enough for PP dispute.