Im sure you will have to send or receive bitcoins via coinbase, since that is who they partnered up with. So, it will be interesting how its implemented. I think we will just see a link to coinbase.
Better than nothing, but I really expected paypal will be interested to provide exchange service itselves and keep the fees.
From the looks of it paypal is going to be essentially be only buying bitcoin (at a discount - this discount would be their "fee") and selling the purchased bitcoin via coinbase via their merchant services.