It is too early to say it as scam but i don't think it is scam anyway. I have read Paypal's official news about Bitcoin's acceptance where they said from the beginning of 2021, Members of Paypal account will be able to use their cryptocurrencies as a funding source at Paypal's supported merchants. They can instantly convert their balance into Fiat currencies. So it is on testing situation. You have to wait for full upgrade of Paypal. You can read official press release of Paypal.
Source=
https://newsroom.paypal-corp.com/2020-10-21-PayPal-Launches-New-Service-Enabling-Users-to-Buy-Hold-and-Sell-CryptocurrencyIf they allow you to pay another merchant eventually, then I stand to be correct - that would be a good thing ( I'm assuming that there will be some sort of settlement between the two parties in Bitcoin ). This could then actually be a way of scaling Bitcoin and could be good for Bitcoin overall. But I would still like to see the option to withdraw.