I got to test this out yesterday, basically I clicked on the order and in the right hand side of the page there was a "Manage order" clickable drop down, that gives 2 options "issue refund" or " "cancel transaction".
Once I selected to issue a refund I was given a choice of full or partial refund, then a variety of reasons for the partial-one of them was refund shipping overcharge.
There were itemized lines showing the order amount, applicable tax and shipping separately. It was great because I was able to type right next to shipping the amount I was refunding. Next an email was generated to customer and my email, like the auto generated ones for shipping notification.
Overall it was easy to understand and quick