Did you make a formal complaint to the eBay Investigations team? Sounds like you probably did, but I have added some relevant information below just in case.
Section 5.2 of the eBay User Agreement (from http://pages.ebay.com/help/community/png-user.html) seems to be the governing provision here:
"5.2 Binding Bids. Except for items listed in a category under the Non-binding Bid Policy, if you receive at least one bid at or above your stated minimum price (or in the case of reserve auctions, at or above the reserve price), you are obligated as the seller to complete the transaction with the highest bidder upon the auction's completion, unless there is an exceptional circumstance, such as: (a) the buyer fails to meet the terms of your listing (such as payment method), or (b) you cannot authenticate the buyer's identity."
Based on this language, the seller was obligated to complete the transaction. She may have screwed up when she ended the auction, but I doubt that this is the type of "exceptional circumstance" eBay is talking about.
I have never been through the process, but you can report her as a "non-selling seller" (see http://pages.ebay.com/help/community/investigates.html#selling):
"Non-Selling Seller - Refusing payment and failing to deliver an item at the end of a successful transaction."
There is a link right on the above web page for making a report. I don't know whether the Investigations team can do something about the negative feedback.
If you need more information, look at the web pages above. You also can post questions in the eBay Community Help Board for "Bidding." Be sure to include the item number.
Good luck!
[This message was edited by TeeJay on September 20, 2002 at 10:36 AM.]