If the flywheel is in fact bad, then it is not the fault of Rono. As the seller, it is your responsibility to asses the condition to the best of your abilities and educate yourself the best you can about the product you are selling. If the buyer has a valid argument, then the honorable thing to do is to issue a refund and take it as a learning experience.
A way to avoid this is to clean the parts and email good, clear, well lit, reasonably sized pictures before making the sale. Pictures can still hide things but they remove a lot of doubt.
If pictures are not an option (some people still refuse to get involve with this electronic world), you can admit to the buyer that you really don't know how or have the means necessary to determine the condition and offer to refund the cost of the part if he covers return shipping. This doesn't always work for both parties, but in the case of rare or hard to find stuff, people will usually agree to some similar compromise. No one can know everything about everything.
My advice, as a professional in that sort of business, if Rono's complaint is legitimate, refund the shipping as he requests, learn from it and move on.
Please don't throw the stuff away. This is a learning experience for you, nothing more.
...And, frankly, if you are going to throw it away, I'm glad to drive up and take it off of your hands. You can give it to Charlie's Salvage.
Lawrenceville, GA