Should have filed a police report. eBay will side with you and refund you. Had similar happen a few times and every time just required filling out a form in whatever city the item was sent to and attaching it to the dispute.
Yeah, $700 is worth a lawsuit. eBay knows who the buyer is and would be required to turn over the transcripts of the conversations to the court, and if you're suing the buyer eBay's arbitration system wouldn't protect them.
Then, after you win that, you can drag eBay into arbitration for the suffering. I bet you'd walk away with $5k or so after expenses if you have a decent lawyer.
The fee for filing a lawsuit by itself is $405. That's before any lawyer touches anything and you get to find out how high a lawyer's hourly rate is.
A simple, easy lawsuit will cost you in the same range as a house. Even if you win, thanks to the American rule of "each side pays their own attorneys' fees."
