We once had a customer who gave us the run around forever with sending a money order...you know all the excuses they come up with! We ended up going through the UPI process, and she still kept saying that she would send it. When the time was up, we ended it and gave her a strike. Money order showed up in the mail, POSTMARKED 2 days AFTER we closed the dispute! So we returned it with a note that we could no longer complete the transaction, as we had already received our credit for our final value fees from eBay and could not complete the transaction outside of eBay, according to their policy. Never heard back again.
Sending back the Paypal payment is what I would have done too. You may never hear back from her. Just make sure you add her to your blocked bidders list in case she ends up getting allowed back on eBay again. And I always keep things on a professional level and be as kind as possible. Last thing you need is for someone to be angry and come back to eBay with a new ID and cause trouble for you out of spite!