The deal was that he would create 2 x sideart artwork, 1 x control panel artwork and 1 x top bezel artwork for $80. We haven't even gotten to the control panel and bezel yet, hehe. I have not told him that I will not be paying him yet, I hate doing that to people. I have funded the project on elance but he has not been paid. I think I can only get a refund if we both agree, not 100% though. He told me he won't stop until I'm happy with the work, so what do I do is the question. Do I be blunt and say I want a refund because I don't think he can do the job?
Just tell him that given his previous statements, you simply don't have faith that he can provide you with print-ready artwork (because he seriously can't). Just to give you an idea, at ideal resolution (at least 300 ppi/dpi) a 500mm x 600mm print would need to be 5906px by 7087px. You can get away with going lower but you will lose a bit of quality, but I would never go below 150ppi and even that's really pushing it. The fact that he thinks a ~84ppi image is suitable to print from and will "look clear" makes it very apparent that he knows very little, if anything, about actually printing designs.
Honestly the fact that he's trying to charge you $80 to provide you files to print from and doesn't even know the basics about printing is pretty ridiculous. There are a lot of times where I'm probably too picky regarding design work, but this is not one of those times. If you print what this guy is making for you, it will be pixelated and you won't be happy with it. Like I said earlier, if you're a weekend warrior and doing your own design then sub-par resolutions and questionable image quality are part of the game, when you're paying someone to create artwork for you it's just not acceptable. On top of all of that, we're just discussing the technical aspects of the files... the actual layouts themselves are pretty weak as well even if they were high enough resolution to print from.
(Just a disclaimer, one of the reasons I'm so passionate about this is I've actually done some hiring of graphic designers at my job and it is always really crazy to see how many resumes I get from people who consider themselves "graphic designers" that do not even understand the basic fundamentals regarding resolutions, color modes, etc. Unfortunately there are WAY too many people out there that kinda-sorta-know-Photoshop-a-little-bit that are more than willing to take money from unsuspecting people, and the crazy part is that most of them don't even realize how unqualified they are.)