Selling anyting is all about the number of people that are aware of the opportunity(visibility) and its desirability. If the home has appeal and an efficient marketing plan is put in place, the chance of selling your property are greatly increased.
Going the route of placing your home on the local MLS using discounted services is only the first step of what is usually a much more involved process. The choice is yours, but banking on only the visibility generated from the MLS could be a disappointing experience.
Using the services of a real estate professional may appear to cost more for the seller but it's a fact the homes sold via a RE professional: sell faster, sell for more money, and make the process an easier experience for the seller.
Before making your final decision, it may be beneficial to speak with a couple good local agents to find out what they can do for you.
Depends on what damages (could be time) you have incurred. It sounds like the seller is under some kind of distress due to the new rate. Unfortunately this comes down to how strongly you feel about the sellers position and its impact on you. If you are asking sounds like you are torn so perhaps offer a meet in the middle (split the good faith deposit). tell him either half or you are well within the legal right to keep the full amount.