Personally, I'd call eBay and try to get my original machine back. It sounds like he traded you down. Money is money, and business is business; insist on what you want. Also contact PayPal and tell them that this happened and can you get your money back. At least the seller should offer you PayPal credit and your machine back. Did he have good feedback on eBay?
This may sound cold hearted, but I don't necessarily believe all the stories I've received about heart attacks, grandmother in hospital, etc. etc.