I forgot about this thread and I saw some recent comments. I wanted to provide an update...
Brad made a post on his blog about the situation with paypal. A VERY large tech blog picked up his feed and his story started going viral. It must have hit Paypal's radar at some point because someone from their office actually called Brad's head office offering to resolve the situation.
Within a few days, he was able to resolve the issue and they ended up releasing his funds back to him. He is still wary about future sales with Paypal but I guess it is so widely used that its pretty difficult to totally abandon it.
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