KISS.
Using the credit card refunded the buyer.
Why do refund the card using the money on Hold, when the buyer is satisfied and it really isn't necessary?
Keep It Simple.
This was all done through the Money Back Guarantee process right?
Or did you receive the return and refund without going through eBay? Either is fine, but there is no reason to get complicated with taking money from your left pocket and putting it in your right pocket.