Wow, tough one. Not a breeder, so not really the response you were asking for, but I will give it anyway.
I think the nice and respectable thing would be to issue you a partial refund. You returned the puppy when it was still young, young enough to rehome quickly.
But it would be a generosity on the breeders part. The breeder fulfilled their end of the bargain. You got a lovely healthy puppy. It's your situation that keeps you from keeping the puppy. Not the breeders fault. So I see their side as well. I would not fault them for not refunding money. But I do think it would be a nice gesture.
Sorry about the turn of events it must be tough on you.
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