My guess/hope  is that paypal will fold and give you a "discretionery payment" once FOS gets involved. This is a can of worms that they will definitely not want opened.

Though on second thoughts, it might be better for the rest of us if this issue did get aired. It's totally wrong that a seller, selling domestically on a listing which does not have overseas postage, should be governed by ebay.com rules.

Good luck.