Its a wonder people still use the service after articles like this come to light. Its not the first time Paypal has pulled this stunt. A mass boycott isn't out of order.
PayPal gets away with a lot of ridiculous behavior because it gets to act like a bank, without being constrained by any of the regulations normally applied to banks.
I don't know anyone who has a positive word to say about them. They're unfortunately the only game in town for certain services/transactions.