Hi Dave, I'm sure you will receive opinions that vary from soup to nuts. Here's mine,
I feel you did everything right and If the buyer did not read the description it is his/her fault.
I think that if you offer the buyer a refund less your expenses you are doing him/her a favor and acting as an honest dealer. I would E-mail the purchaser and explain your situation.
Bear in mind however that the purchaser has the ability to post negative feedback for you regardless of who is right. You have to evaluate how important that may be towards your reputation and take that into consideration