Here is exactly what you do to get your money back.
If your paypal funds came from your bank account, all you have to do is contact your bank and tell them the item was never sent to you. The bank will remove the money from his account, and give it back to you. Simple as that. Your bank only cares about you, their customer. They simply deduct the money from his account, and put it in yours.
You obviously don't know how banks work, they have no jurisdiction on another bank's policies, once the amount is approved and received, its in the other bank's hand.. :lol1: no one can just remove money from another bank account without authorization from the account holder.
Forget the return address, you could try it, but I highly doubt thats his real address, and even if it were, which enforcement agencies will act on this? They'll just say its your problem, you deal with it. If you act on it, you'll get in shit at the end.
Like i said earlier you'll have to deal with Paypal, and hopefully they will help you out, and not turn it into an "you say, I say" situation, which in the end you'll be screwed from your money.