I use paypal to sell intangible digital products. I set up a system with paypal IPN where the user is automatically sent the items when the payment goes through. Now, the thing I hate about paypal is that when users decide they want to leave the website they often go back and issue chargebacks/disputes on their past purchases. Paypal always rules in their favor which is complete BS as the user got what they paid for and only wants their money back because they are done with my website. Paypal has no respect for digital products. If I had been sending tangible items i'm sure that wouldn't happen.
So we're not in the same boat, but I feel your pain about paypal. Maybe you should look into google checkout or something.