Refund the way the buyer paid, upon receipt of the dress.

that way, it is on record with Paypal you did issue a refund.

you can go into your Paypal account and refund directly from her payment. That is the best way. She doesn't need to upgrade her account to get the money, if that's what is worrying her.

if she had opened up a claim through Paypal, she would have needed to send it back to you, tracked, at her expense, before receiving a refund for the initial payment. Under an item not as described claim. Paypal won't issue refunds for change of mind.

Wait for the dress. Without a tracking number you don't even know if it has been sent.