Great advice. To add to this
1) Always bring a friend when you do the transaction. Two friends, if you have them, are even better (especially if you're carrying cash).
2) Don't agree to meet in the parking lot. Meet inside a public business. One that is well lit, and has surveillance cameras. Alot of businesses have coffee shops inside (Walmart, Target, grocery stores, etc), which can be a great place to meet. Then if you need to go outside you can do so. This way they are one film and potentially seen by other people if needed.
3) Trust your instincts. If something doesn't seem right, back away.

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Blazeman Warrior - so others may live
Live more than your neighbors.... Bark at the moon like the wild dog that you are.... And by all means, whatever you do, get it on film.

Unless things have changed over at PayPal it used to be that if someone uses a stolen credit card from another country your ass as the Seller is not covered as it would be domestically. As others have said...do the math...alot of points don't add up here. There's ways to flush out a scammer. Ask them for phone number, etc. What usually red flags them to me initially is the typical pidgin English or a list of demands about the transaction that only a crook would suggest up front. These scumbag thieves know that people are anxious to sell their used gear in this economy and capitalize on this. I say use patience with all transactions via the Internet...it's a virtue that serves us all in the sport of Tri as well.

Paypal does not have to follow any banking guidelines. They claim to be safe, but it is limited. I have been screwed by paypal as a buyer and seller. As a seller, you need to show delivery confirmation to a verified address. I would not ship usps for expensive items. Usps does notnhave tracking. They only can say when the item got there. As a buyer, you can buy something, never get it, and the seller can clean out his bank account. If you know the rules..... You could sell the bike..... Then clean out your account to make sure the buyer can't say he didn't get it when you know you shipped it. Also, if younhave tracking, you should be ok.

Although, if it seems like a hassle, just walk.

Thats good advice. Why didn't I think of that??!!
I've never been scammed through Paypal (even selling items to people outside the US through ebay), but have always worried about the "didn't get it" or stolen credit card scam. Paypal having access to my account, where they could just grab my money has always scared me.