Found a guy with hundreds of positive feedback on localbitcoins by the name of Face0ff.
Long term established account with hundreds of successful payments with paypal and dwolla. (I know it was stupid to accept those).
Transaction took the better part of the day to process but eventually went through.
I released the escrow.
2 days later I get a chargeback notice.
I've updated his feedback...
https://localbitcoins.com/accounts/profile/Face0ff/Of course since I have such a low transaction volume (only $500), my feedback has no impact on his score.
WTF is the purpose of a feedback system if your reports have no impact? That's ridiculous, you'd be better off selling to a random person on Craigslist.
Anyways, expensive lesson for me that I figured I would share with you.
****Update****
As mentioned below, he has made things right. I'm leaving this up as resolved, the admins can do whatever.