Sounds like several legal issues and you may want to consult an attorney. No one here can give you legal advice.
But... you do have a legally binding contract with your listing agent. You agreed to hire him to sell your house, which he has. If you terminate, then yes, he could...theoretically... sue you for his commission. (you breached the contract, not him). You are also in a legally binding contract to sell your home to this buyer. Do you really want to let this deal fall apart over a few days or weeks and start all over again with another agent / buyer??
If you had a backup offer, that would be a different story. But sounds like that's not the case. Why shoot yourselves in the foot? Why not grant the buyer the extension he/she needs?? Not sure what you mean by 2 more weeks to be in your house...possession date should be part of the contract and not come up as an issue this late in the game. Normally when you sell a house, you move out of it within a day or two. OR agree to some sort of "rent back" situation. Did you offer to pay the buyer a pro-rated amount in rent to stay for 2 weeks?
Again....sounds like several different legal issues are going on here, and it's impossible for anyone here to give you a clear cut answer without seeing the contracts. Good luck to you.