I know this is an old thread but I am new here and wanted to add my 2 cents for what it is worth. I agree with the fact that the "rules" of eBay and Paypal make bargain hunting more difficult and create addditional shipping expenses but they were created because of jerks like the one you encountered but they also protect the seller.
There are several places to print labels on-line and you do get a discount on some of the services by using them. Tracking is 18 cents for First Class and Media Mail on these sites. I personally use Paypal for all domestic mail, Ebay for Priority International and Stamps.com for First Class International. Incidently stamps.com has a free version for eBay sellers. I have almost never purchased insurance unless the item was very valuable. The seller just needs electronic proof the item was delivered to the ship to address attached to the payment. That means the buyers in high risk areas are responsible for the item once it reaches their doorstep. If the buyer is going to claim the item was damaged they need to return it (with return shipping at their expense) before a refund would be issued.