I believe the seller was unaware of the modification. Most silicone is clear but they sell white silicone as well. When it dries it can have a rubbery texture. If you can dig most of it out then you will end up with a stock racket more or less. $85 shipped sounds like a fair price given what slightly used Youtek Prestige MP sell for these days. The seller threw in the silicone mod for free.
Before you go through all the trouble of undoing the mod, assuming you keep the racket, you might want to hit with it to see if you like the extra heft. Most of the weight is at the bottom of the frame so it should be even more head light than stock and you might actually like it better. Even so, the seller owes you some degree of compensation because an altered racket is usually worth somewhat less than a stock frame unless it was altered by a superstar of racket modification like Ferguson, Bosworth, et al.
Probably makes more sense to do a partial refund ($10 or whatever you two think is fair) than returning it since you cut out the strings already so you can't return the racket as it was when delivered unless you restring it. It will cost you $10+ to return the racket.
Both of you have excellent references. The seller has already responded in a responsible manner and seems willing to work it out. I think, if anything, problems like this, if handled properly, make a seller look better, not worse, as it is evident he will address a legitimate gripe should an unexpected problem arise. Some sellers are not so responsive.