Thanks, Allison.
I read through that and kept going until I found an explanation. It seems that I can either accept or decline the payment. If I accept, PayPal washes their hands of me in case of chargeback. I would not have seller protection.
And obviously, if I decline, then I lose the sale and probably make the buyer mad.
The buyer has 75 feedbacks, and they are all her feedback for things she has bought. No sellers have left her any feedback at all in the three years she's been buying on etsy.
So I guess I'll take a chance and accept the payment.