I have just read the neutral that she has left you and it highlights one of the many problems with the Ebay Feedback system. She has left a neutral for the product, not you as the seller or for your service.

As she has left you a neutral, you have already earned a defect for this transaction.

It is my expereince and from reading these boards that most Return requests that are NAD are supported by ebay on the buyers side. If you ask Ebay to step in, they are unlikely to side with you, and then you earn a defect for case not resolved by seller as well.
Ebay do not support any aspect of Aust consumer law and it is pointless to argue with them IMO.
I would say, accept the return, block the buyer, reply to her neutral feedback including her ebay ID in your reply, so it is a warning to other sellers who can also block her, swallow your hurt feelings and the truth that this is all so unfair, and move on as quickly as possible.
With the new ridiculous return and defect system, we are all going to cop this sort of situation. Deal with it as blandly as you can and move on as quickly as you can, but keep on these boards you get a lot of support from other sellers.