My experience has been - if the seller misrepresents the item - then they pay shipping BOTH ways,
If you change your mind and the seller accepts returns, you pay shipping both ways.
When damaged in shipment - I've actually never returned anything damaged. I always worked a deal out with the seller where I got a discount I was happy with.
I don't know if eBay has a firm policy on this - I think they decide each case by it's own merits - as to if it got damaged due to poor packing or not.
If I were you - I'd make a suggestion to the seller. Decide what you'd be happy with and tell them that you will be happy to accept $XX as a settlement. If they don't like it, you can escalate the case. If eBay says you must return the item and pay return shipping, you can always decide that it's not worth it and keep the item instead.