@Brian2430
The problem is, when you as a host cancel the reservation yourself, Airbnb will penalise you: a fine, loss of Superhost status for a year, and it will appear on your profile/reviews that you cancelled a guest at such and such notice, but without giving a reason why you made the cancellation, which looks bad.
More recently, Airbnb introduced a new policy which means that hosts will get fine a lot more, especially for cancellations that take place last minute.
So, no, it's not really a viable option because, not only will the guest automatically be issued a full refund if the host cancels, but the host will be charged extra on top!
Do double check that customer services did not process this as a 'host cancellation' with penalties to you. Check your transaction history page to make sure they are not going to deduct additional amounts from your future payouts. I hope that has not happened, but it wouldn't surprise me.
They once refunded a guest (who was not entitled to any refund under the cancellation policy) for her whole stay. Not just the unused nights, but for TWO WEEKS she had already spent at my listing. And this was a guest who hadn't complained about anything. I did manage to speak to the stupid CS agent who issued this refund, but she couldn't give me any explanation for her actions, nor did she care. She just told me to request the money from the guest myself, which is nonsense. I did eventually get my money back but I really had to fight for it.