Doubt paypal will lower the fee for bitcoin low enough to hurt their own bottom line.
And as soon as buyer realize they don't even need paypal and deal with merchant directly, paypal will go away.
That's probably right. But for the shortterm, Paypal accepting or supporting btc is a good thing i think. The exposure will be great, and, as you say, hopefully many folks who find out about btc through paypal will end up ditching paypal for the "pure product".
We already have payment processor such as Coinbase and Bitpay. They only charge 1%. If Paypal wants to compete with them, its fee cannot be too high.