Buyer is claiming PayPal is broken and wants a cancellation. How can I (the seller) proceed and guarantee to protect my own ass?

I've had the delight of participating in this intellectually stimulating conversation after selling my used graphics card this evening.

The buyer wants to cancel, but it's been more than an hour since the sale. How can I proceed and make sure I stay in good standing? Is there any way for the buyer to request a cancellation now that it's been more than an hour? How about an unpaid item claim? Basically I want to do whatever doesn't give the buyer a loophole to leave negative feedback, because even though I have proof that the buyer is the one that cancelled, I really want to avoid eBay's customer service at all costs.

Side note: Even if they could pay, I'm wary of sending them the card because this buyer sent up a ton of red flags with that first message (I heard: "I'm going to break this card and claim you sent me something that doesn't work"). But just out of curiosity, is it actually possible for Paypal to prevent an account for paying? I thought they only held funds, not stopped buyers from paying.

Thanks!