Wow RamAirZ, I bet you didn't expect this amount of comment when you originally posted this topic??

I am not sure of the legal standing in the USA, but here in Down Under Land, anyone paying a deposit for you to hold something for a specific period, would automatically expect to loose the deposit if they did not go through with the deal.

Apart from the legal side, there is also the moral side, and I think you have more than met your obligations to this guy.
Douche bags like him make a habit of trying to take advantage of the normal good guys. The only way to stop him from doing this to other people in the future, is to take a stand, and keep his deposit.
Perhaps give him one last chance, with a firm date, to buy the wheels before they go back on the open market.

Just as a word of caution, I wouldn't go meeting him on his turf - he is just as likely to have some heavies for backup.
Douche bags rarely hunt alone - they don't have the backbone for it.

Good luck in sorting it out, but either way you can hold your head high.

Regards

PK