I just answered this same type of question in another forum, how coincidental!
Why do you think that your good reviews would be spoiled? I've learned over the years that a negative review won't kill you. In this case, lets say that the guest does leave a negative review. Y ou can then reply to it, and clarify the situation. A reply to a negative review is not for the guest, the reply is for future hosts and guests, to see that you are professional in how you handled the situation.
You have already decided and indicated to the guest that you'd refund them, but I would not have. I would let them cancel and then let the cancelation policy take effect, and have it all handled by Airbnb. In your case now, they must still cancel, and then you will have the opportunity to refund them through the resolution center. It is very easy.
I hope that you don't still get a negative review, as there is nothing stopping them from getting a refund and still reviewing you, as they physically did stay. They only can't review you if they never stay.