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I would either send him a check refund by mail, or tell him to pound sand if I thought he was scamming me. That is too far of a distance for either one of you to travel to make things right, plus, you don't want the old "siezed" engine back anyway.
Perhaps some pistons thrown in by you might appease him, but don't offer more than you are comfortable with just to keep his hard feelings in check.
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