Just some small advice to the Buyer -
Your willingness to buy this cue, even after the negative attitude email from the Seller, and your willingness to go outside the PayPal Buyer Protection Plan (by sending gift money), is your responsibility, your fault.
But I don't say that in a mean spirit, I just want to be clear about your role. Maybe it will help you put this behind you as one of the many lessons to be learned when buying from a guy who really does not want to sell to you, and basing the condition on low resolution, dark photos on the Internet accompanied by the phrase 'very good condition'.
You really would have been better served to buy this cue brand new with a full warranty. Your time replying to this thread, even paying yourself just a minimum wage, must be running into the hundreds of dollars.
Another consideration - any cue with that type of butt and joint construction, with that type of rubber bumper, will normally show wear and such nicks over time. How much time? I don't know; back in 1972 I chipped and ruined the butt of a nice Tad in two weeks ownership; the prior owner had not harmed it in two years. But I learned something - I've played with a different but expensive cue since 2007, and it does not have a mark on it anywhere, and hardly any noticeable chalk residue, because I've been most careful. Those shaft nicks look like what you get when the shaft jumps upwards when playing in bars with those cheap sharp-edged Budwesier lights hanging low over the table.
I wish you the best, and the OP also. I have been on both sides of this coin, as both Seller and Buyer.
The best thing to do is to suck it up and let it go. The minute you chose Paypal as Gift, for whatever reason (Seller said that was the only way he would sell it to you, I saw that email), you decided your fate as far as getting PayPal to offer a refund.
Unless PayPal has changed their methods since I sold items on ebay years ago, they do not get deep into any dispute. If the Buyer clicks on the web page box to claim "item not as advertised", Payypal refunds the money and debits the Seller's account for that amount. They used to not even care if the Buyer sent the item back to the Seller, or just kept it. But with Paypal as Gift, the Buyer had no protection from Paypal. Many Sellers know this, and demand Paypal Gift payment because they avoid the small percentage owed Paypal, and they also avoid the paypal Buyer Protection Plan.