I deal with eBay/PayPal a lot, less all the time though. Yes, they should have your back. Yes, they're 99% on the side of buyers and "Seller Protection" is complete BS. No, don't ever deal with an eBay seller outside of it or you can lose the Buyer Protection.
Yes, PayPal CAN still help you if the seller emptied their bank account. What happens in that case is that if Buyer Protection covers you, you're reimbursed and PayPal goes after the offending seller to recoup their losses.
Where was this POS located?