mail is "forwarded" when the buyer leaves a forwarding address with the PO

 In that sense, I'm not sure what's wrong with the tracking history you copy/pasted. It looks like you shipped to an address in Scottsdale, and it was forwarded to another address in Scottsdale (?) and was ultimately delivered to Kentucky.

I see no evidence that it was mis-delivered. The only thing that looks unusual to me is that it appears to have been forwarded twice. Although I suppose it is possible if the addressee moved twice within one year (I think forwarding addresses are only good for 12 months), first within Scottsdale and then to Kentucky.

Did your buyer contact you to complain? Otherwise, there is no reason for you to contemplate refunding.I assumed that the undeliverables and forwards were USPS errors.

Why would it have gone out for delivery if there was a change of address on file? Wouldn't it be re-routed earlier in the chain?

Yes, the buyer submitted an order cancellation request (The River) on 5/1/14 - a week after tracking showed it (mis?) delivered. First time I've run into this situation.