They say they'll refund returns minus shipping, but I don't see how that applies to their mistake.

This ^^^^. Yes, it was in all likelihood an honest mistake. But an honest dealer who makes an honest mistake should cover the consequences/expenses of that mistake.

I've done it. Sold a lens on a photo forum site. I honestly had forgotten that there was a slight mark on the coating of the front element. It had no impact on image quality, but I made the mistake of listing it as "minty". The buyer noticed it upon receipt and let me know. I paid to ship it back and refunded him the entire cost. I wrote it off as my penalty for not paying attention.

If you can send it back at no cost to you, do it. Take the money and buy her a book - you said she likes to read.

Fair. They sent the wrong thing which is different than a return because you don't like an item for whatever reason.