[LONGHAIR]

This is one crazy story, that I hadn't seen until now. Then I read the whole thing.
First off, you were way nicer about it than I would have been. It's just lucky that the neighbor contacted you so quickly. There are some really stupid laws out there that would have given him some substantial rights in this mistake if it had been allowed to continue too long.

I have no idea how TN law works, but here in OH, he would have had to buy Title Insurance to cover exactly this kind of thing.
(I bought my grandmother's house through dad and the lawyers when she was no longer capable of living alone. Even though she had owned the property for over 70 years, I was still required to buy Title Insurance. It was cancelable after two years IIRC?, which I did, but it was still required by law at closing and for a reasonable time after.)
At that point, the Title Insurance company would be involved and fighting it out with the real estate company.
The man, though an @$$hole through his actions with you, was mostly innocent (at least initially). He really should have questioned things quite loudly when the address was "wrong" and should have done nothing until clearing that up first.

Whether he knows it or not, this guy's best bet would have been to buy it from you, pretty much regardless of that price. Then he would still at minimum have an asset, even if he is theoretically upsidedown in it, because it put you into a "name your price situation". He could have saved the cost of an appraisal to assess the actual value of the trees. As it is, he has money out on another piece of property that he cannot develop, has money involved with lawyers, whatever fines/fees that occur via the court system and he had paid someone to do the tree cutting in the first place. None of these costs equates to an asset, they are all just money thrown away.
Then he has to deal with the county (or whoever controls this) over cutting the trees if they were somehow "untouchable" per local laws/rules. This may fall onto the company that actually did the cutting, assuming that they needed some kind of permits to do this and avoided them but that is none of your problem.