The star rating is used to do all sorts of hidden things on ebay. The ones that I know of include search rankings, which means that sellers with less than perfect star ratings can get their listings bumped down the list in searches, making it less likely to get any bids. I'm pretty sure sellers with either too few recent feedbacks or a less than perfect star rating can be subject to the 21+ day hold for Paypal funds. The star ratings are also used to determine the Powerseller(I think they still call it that) status which gives significant discounts and benefits to those people who are considered Powersellers.
Big sellers can absorb the odd less than perfect ranking, but the threshold is VERY high, so even one bad star rating can cripple a small time seller's account. I'm guessing that the seller in question was a small seller since she/he could figure out who gave the bad star rating. It probably hit their account hard enough to be noticed, and most likely bumped it out of the "perfect seller" circle on ebay which is why there was such a quick reaction. She/he probably got a notice of what happened, or logged into the account and saw some new problems pop up. That may have been the case, but the seller still should not have reacted as she/he did. It was completely unprofessional. Though if she/he did a decent job and suddenly has to wait a month for payments to clear from now on, it's a bit more understandable. If the seller isn't very active, it can take a few months for the effects of a bad star rating to go away.
I think the real problem is that ebay doesn't give buyers the real facts about the star ratings, and they set the bar way too high. The highest score is a 5, but that's also the only score they don't penalize the seller for getting. Giving the highest score for most things usually means you think you got exceptional service. On ebay you really should be giving it out to any seller who gets you your item in a reasonable time without doing something completely unacceptable. The *only* time I give out less than perfect scores is when the seller has done something pretty bad, and has refused to work with me to fix it. Massive shipping overcharges, held a package for weeks before shipping and lied about it, that kind of thing. Even then I give the seller a chance to fix things, if they can.
The whole star thing is just another policy that favors the larger seller over the smaller one. Ebay's been trying to squeeze out the small time garage sale sellers in favor of the big professional sellers for a while now. The thresholds are set so that big sellers can take a few bad ratings from buyers, but if a large seller has a consistent problem, it'll eventually show in the star rating. Unfortunately sellers who aren't very active get hit really hard. If you only sell a few items a month, every little ding is a significant percentage of your star rating.
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