I usually detest "processing fees" but in this case it is gonna cost HP a lotta time, effort and money to issue you a new ticket, flag the lost ticket, etc. As for the unused credit you mention, I dont see what that has to do with the situation. You voluntarily waived it when you had the paper ticket issued.
Sorry but for the first time in 2001, I gotta side with the airline (and it turns out to be the crummy HP).
MisterNice