WalnutHill - I agree with everything you say in the context of a normal business transaction.
Buying and Selling via eBay is not a normal business transaction - when you use eBay as a middleman, you are under contractual obligation to follow the parameters they set for every deal.
Ebay's policies make it very clear that the seller is responsible for getting the item to the buyer in good shape - and that insurance is for the protection of the seller, not the buyer. If you don't want to eat the cost of replacing the item as a seller, you should be mandating insurance.
Agreed. eBay is not a normal business channel. PayPal adds even more risk for sellers from fraudulent buyers, just as credit card chargebacks do for retail merchants.
The first time I took someone to court for buying a computer, then initiating a chargeback with their credit card company, she was surprised. She said "I do this all the time, no one ever complains. Why are you? It's just a credit card company." What is this world coming to?