Painting the wall spots ~$500

You often can't just repaint one spot or it looks wrong. Painting over the spots might have meant they needed to repaint every room that had these spots in order to get it back to a uniform appearance. Easily $500 for that.

Whole house cleaning ~$500

Depending on the state the house was left in and how big the house is, this is also a pretty reasonable cleaning fee. Did you or your roommates smoke cigarettes or pot? That stench clings to everything and will usually require a deep cleaning to get out.

They did offer to let me inspect the home.

Did you ask? It's pretty typical to have both a move-in and a move-out walkthrough when renting, that it can be shown that a problem did or did not exist prior to moving out.

It sounds to me like the charges are pretty reasonable and the level of cleanup needed doesn't seem unlikely for a house used by a group of college students. The extra $200 he wants you might not have to pay unless he pursues it in small claims, but from what you've said here I wouldn't expect any small claims actions from you to do any good.