Based on the information provided I would agree that you should be entitled to a full refund of what you initially paid.
According to your information if the order was placed prior to 4pm on 27th it should have been picked up and delivered on 28th. Looking at the email trail it was ordered on 27th, picked up on 28th and delivered on 29th. Would this generally be much of a problem, possibly not, but as you stated you purchased from the seller as they set their own delivery timeframes not you.
eBay seems to be trying to get away from the old online garage sale approach to being an Amazon style site where bricks and mortar stores can open a shop front to tap into the market. Partly due to that I think retailers would be under pressure to show delivery times which are outside their control and even possibly unrealistic just to stay competitive. At the end of the day however they set the conditions of sale and it is their responsibility to meet all conditions as they cannot select which conditions are important to the purchaser. Obviously the condition about delivery was important to Ric.
Whilst you may be in the right in relation to not accepting the item outside their delivery conditions I personally didn't feel comfortable about how you handled the situation in your emails with your aggressive approach and use of language.
The responses from the retailer were all quite professional but as for your tone I was just waiting for you to say that you were going to approach Today Tonight. Whilst I can understand your frustration sometimes to get the best outcome you just need to take a step back before responding as it would produces a better result for you in the long run. The lady who was communicating with you would have sorted it out but you had to start attacking other staff members which was of little use.
As for Paypal, as stated earlier you should be entitled to a full refund including postage. The item arrived but it was outside the sellers own delivery promise ..... Not much point receiving a birthday cake the day after the party.
I trust now you seem to have some support you are going to provide the seller with a link to this thread?