I am open to correction on this, but surely, if Paypal is shown on the listing as one method of payment, then it must be possible to pay through Paypal even if the seller has added a statement saying they will not accept it. If you pay through Paypal and the seller refunds the payment then It's my understanding that you can still open an "item not received" dispute. Records would show that you were the successful bidder and that you did in fact pay for the item.

This is my understanding, but  I am not as experienced as some members here and, as I said, I stand open to correction.