You paid.
Payment was showing as pending.
The seller had not accepted the payment.
He shipped that day.
You received the item.
The seller opened an Unpaid Item case.
Unless you pay the Unpaid Item case will become a Strike against your buying account, which can make buying on eBay more difficult.
You should go to your PP account and cancel the pending payment.
Be sure to let the seller know what you are doing.
Then, having received his CORRECT PP account number, repay for the item.
Then he can close the UID.
He has his payment, you have your item.
Both can leave feedback.
This does sound like an honest mistake, mostly on the seller's side, but he does seem to be working with you.
BTW, many sellers have an automatic Dispute mechanism when payments are not received in a reasonable period. He may not have actively opened the Case against you.