That person probably only ships using Priority FRE's. While the actual shipping might only be $2 1st class, the seller now has to go find/buy and envelope/box and tape.
I would do the same thing (I just wrote this on another thread today).
I would say that the seller should have put that in the same post describing the fabric, rather than wasting time - both hers and yours - so you would have known upfront without having to "decline" it.
The Seller wasn't making any money off the postage, and if you were paying via PayPal, was actually losing some of the cost in the transaction.
If you only bought 1.25 yards from eQuilter.com, how much do you think they would charge you in shipping fees? (And I'll bet the fabric would be more expensive than what you paid here).