It says:
"Firearms
You may not use PayPal to sell or advertise any firearms produced after 1898. This includes all "pre-ban," sporting, collectible, and curio and relic (C&R) firearms, regardless of their present capability to fire a shot. "
I take this to mean you may not advertise for sale any of the prohibited items on their 'sites. It does not say that you cannot pay for these items, via paypal, if the transaction takes place on another site. I deem it is perfectly legal to buy an item, say on Auction Arms, then pay for it thru Paypal. Matter of fact, I just sold a couple of high-capacity mags, on Gunbroker, and accepted payment for one of them via Paypal.
Don't get me wrong, I dislike Ebay and Paypal's anti-gun slant, and would use other means to do business, if they were in as widespread use. It's just a necessary evil I have to deal with, and try to speak against whenever I have the opportunity,,,,,,,,,,,,,Bug.