Heather and all:
I have just done my first refund on an item purchased through DC. It was simple and easy. However, I would like to add to the comments, that I would much prefer that the monies be refunded through Etsy or my bank account rather than through my CC on file. It is one more bookkeeping ledger I don't want to add to the pile ;-)
Hoping Etsy will tweak this in the future, as we walk through these issues together!