I read through the legal stuff at the paypal site. From what I can tell, buyers are not eligible for "purchase protection," aka paypal dispute resolution, aka chargebacks, when purchasing bitcoin. It seems to me that bitcoin falls under the "intangible items," the "items equivelant to cash," or the "personal payments" categories. When using "personal payments" the seller has to chose the "personal" tab.

Speaking to the buyer: "PayPal will generally not find in your favor if you escalate a Dispute to a Claim for an item which is not eligible for PayPal Purchase Protection."

Reference:

Paypal User Agreement, 13.3.

Based on what I've read on these forums, Paypal is a no go for sellers, but based on what I read at the paypal site, I'm not sure why that is. If sellers choose the 'personal payments" option, aren't they protected? Does paypal not enforce it's own rules?