All I want to do is convert BTC to dollars in a paypal account, not the other way. Will PayPal block my account if I am doing this?
They could. As well as the account of the other party.
Is it possible to sell Bitcoins on an exchange which then transfers your money to a PayPal account? I'd like to avoid using a bank account for this. MtGox doesn't seem to support paypal...
You would be hard-pressed to find such an exchange, for the reason stated above.
https://www.spendbitcoins.com/convert/paypal/ seem to offer converting Bitcoin to PayPal.
If you can use Amazon Payments instead of PayPal, you can try
CoinCard which is highly recommended.
I'm going to avoid selling without an exchange website so I don't get scammed.
If you do the trade with a reputable member of this forum or bitcoin-otc there is close to 0 chance of being scammed, and it's also not very likely PayPal would find out.