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Honestly, I would avoid using PayPal for anything even remotely adult in any way.
About a year ago my PayPal account was suspended. I figured I'd slipped...no. My account was suspended because on my MAINSTREAM ezine, I was accepting PayPal donations and also advertising, via LinkShare, the Eroscillator. (Ironically, LinkShare doesn't - or at least, didn't when I signed up - accept advertising on adult sites. So yeah, I could sell a turbo-vibrator, but only on a mainstream site.)
I went back and forth with a PayPal rep for a while, and received the typical, robotic responses. Eventually I managed to track down an Ebay liaison who was able to get the account unlocked.
Anyway, point is, you don't even have to knowingly violate the TOS - you may find yourself suspended. If you use PayPal in your mainstream business, be very, VERY careful about any crossover.
*Passes out free umbrellas in case of prematurely falling sky*
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