As for the bait and switch accusations, that's a pretty serious accusation. The rules say limit one on the high end frags. Seems, to me at least, you were trying to circumvent the rules by placing multiple small orders to get multiple limit one's. The "exact wording" may not have explicitly said limit one per order, but I think the average consumer would naturally think that limit one meant limit one per customer. I see no issue with canceling your order for that reason. I know multiple people were interested in the hornets for $10. If he allowed everyone to place multiple small orders like you were trying, only a couple of people would get them and you'd see other discussions on here about how he didn't have what he advertised. Seems like a no win situation...
I'm not familiar with the inner workings of paypal, so I can't speak to whether or not it's his fault. 3 months does sound like a long time for a resolution though.
Sometimes I wonder why he bothers being a WAMAS vendor. It's fairly obvious that a lot of people on this forum have it out to hurt his business. (Not saying this post has that intent, but I believe others are) Same discussion over and over.