you could easily send BTC out of paypal to any bitcoin address, they could nto sue it and disable those coins from accessing the blockchain. However they could say that if you do a BTC transfer from paypal account to paypal account they could offer protection then by freezing the funds or having a 5 day period before the user could withdraw them. Once they are withdrawn there is nothing paypal could do, of course this removes the immediacy of payment aspect of bitcoin so merchants may not want it.
Really because bitcoinoffers low fees this sort of service would be of benefit to the buyer only.
Alternatively PayPal could use bitcoin as their backend for transferring money internationally. If i want to pay someone in USD but only have EUR then they could exchange EUR for BTC then BTC for USD and pay the USD to whoever I was paying.
They could place any restrictions on it they want if they keep both keys secret. They could also just keep all the bitcoins in the same wallet, and keep track of how much each account owns.
Really because bitcoinoffers low fees this sort of service would be of benefit to the buyer only.
Alternatively PayPal could use bitcoin as their backend for transferring money internationally. If i want to pay someone in USD but only have EUR then they could exchange EUR for BTC then BTC for USD and pay the USD to whoever I was paying.