[pnathan]

* Don't stiff people, ever.

* Don't renege on agreements.

* Don't play hardball with bit players.

* Don't ask for refunds on contract work.

You biffed it[1]. Suck it up, pay the guy his money, apologize for being a douche (maybe ask for a public acknowledgement of him receiving his money even), move on.

[1] A good way to properly manage this sort of thing is to have milestones, on each milestone, evaluate the contract for a terminate/no-terminate point; if it's terminate, pay what's owed up to that point and tie the relationship off. Which, by the way, is not uncommon advice on the internet.