Now, we could argue about whether a drawing by some modern artist that looks very like the work of Picasso is really any less valuable in aesthetic terms, and this question has cropped up a few times in the art world - see Orson Welles' little-known masterpiece F for Fake for a documentary treatment of the subject. But the fact is that the buyer is not satisfied, and whether the buyer has poor taste or is acquiring a famous signature rather than excellent art is beside the point. The buyer could have chosen to love the piece on its own merits or sell it on to some more credulous or indifferent person, but has instead exercised a contractual right to a refund (from the broker). And the broker is, in turn, exercising its contractual right to make the seller carry the cost of the misrepresentation. The seller could have brought the piece to an expert and sold it for cash, as-is and no refunds, but experts are used to such risks and would offer a much lower price. By offloading much of the transactional risk to the broker (compared to, say, advertising it on Craigslist), the seller accepted the broker's conditions.
It's all very well to complain about Paypal being terribly mean, but somehow I doubt the original offer of sale was 'possibly-fake violin, buyer beware.' Lots of people sell damaged or otherwise flawed goods on eBay with no problem, but they clearly identify the potential deficiencies so that buyers cannot claim to be surprised after the fact. If authentication disputes are a common issue with used violins, then the seller should have used an authentication service or sold on consignment through a specialty dealer, and accepted the costs involved as a marketing expense.