I find it interesting how everyone is jumping to the conclusion that the seller was responsible for the repaint, and deliberately tried to con clockwork463.
If the repair was good enough that clockwork463 wasn't bothered by it until it flaked off, maybe the seller didn't notice it either. Sure, it's probably easier to get out the torches and pitchforks, but this is getting ridiculous.
clockwork463,
My take on it is that you should contact the seller, and see if you can work something out. Unfortunately, at this point it will be your word against his, and I don't know of any way to prove one way or the other who should be held more accountable for the damage, or whether it may even be the result of some shoddy paint repair at the factory (which has happened to me before).
It will be difficult to build a case with Paypal at this point, since you've already left positive feedback for the seller (implying that you felt that the piece was satisfactory when you received it), but it may still be worth a try.
But, if it were me, I'd probably first check into getting it fixed. Maybe the cost of that will be less, overall, than the headache of pursuing a claim.