This is the paypal scam in a nutshell: the scammer is trying to get you to send them money via western union. That's it!

The seller thinks they are getting top dollar for their item for just a little bit of trouble. All they have to do is western union money to a "shipping agent" and bam, paypal releases the full amount of the cost of the item, reimbursement for the shipping costs and maybe a little extra for their troubles to their paypal account. Hey, they even got a "legitimate" email from paypal telling them this, right? about how safe and 100% secure it is?

Can't you just hear the scammer/"shipping agent" laughing all the way to the bank with the 450-850$ you just sent them free and clear with no way to trace?