Well, I would check with PayPal then and have them explain the details. I am pretty sure that they don't put up any fight what so ever if they get a chargeback on an intangible item. This is one of the reasons that I'm always a bit nervous about using PayPal on a website sale if I don't really know the people involved... the seller is taking a lot of risk. But since you are the buyer, it gives you a bit of a safety net to fall back on if things go completely south on you.
If you can wipe the slate and restart the transaction doing it in a phased way, then it would seem that you could get there if the seller is amiable. Something like 50%, then the hosting account login is delivered. Upon receiving an email that an inspection has been done and everything is in order, and your sending the next 25%... then you receive the next piece of the puzzle... and on and on. The last hosting company I bought, there were a lot of pieces involved, including a half dozen design projects there were in progress. Trying to get all the accounts changed, and licenses moved, and clients settled... took some time... so there was a hold back until the complete punch list was cleared. And, we had a contract that we both signed that clearly identified the terms and who was responsible for what. In the end, I caved and paid him remaining funds before I had everything, and I ended up getting hosed on the remaining items. After several months of preparatory discussion, and a lot of promises... once the final payment was made, the seller disappeared on me.
You can never be too careful. The thing you have to weigh is how much money is it, and is it worth the risk. For a few hundred bucks, its not. Once you get into $x,xxx, to me its worth doing it cautiously. Everyone's threshold is different. Hopefully this guy will come through for you.