To recap :
- You cannot withdraw your Bitcoin
- You cannot Pay anyone ( ironic ) , so it can't even go to another PayPal account
- You dont own the keys
For discussion may I ask, what's the use of the bitcoins if you are unable to withdraw or unable to send it to another person? While PayPal is a global company they must have some reasons for not allowing these actions!
Probably they are trying to become a centralized exchange service where you can buy bitcoin and sell it to paypal itself. Centralization at its best!