This is the route I'd take as well and if he does give negative feedback just comment after it explaining how the idiot didn't realise his phone already had this built in.if its a compatability issue I would not refund the postage, I'd refund the item once I got it back at his expence...
This kind of one off negative feedback won't put people off buying from you. They will read your comment and think 'hmm fair enough, that guy is an idiot' and will then buy from you.
Don't worry about it and also I think you can report him for trying to extort you by threatening negative feedback. Ebay don't like when people use feedback threats.