Some people are selling bitcoins and receiving PayPal payment on LocalBitcoins.com:
LocalBitcoins is in-person exchange. The problems with PayPal tend to hit the bitcoin seller; because PayPal transfers are reversible and bitcoin transactions are irreversible you must trust the party to whom you are selling bitcoins. A malicious party can file a PayPal claim and get their fiat currency payment recalled after they receive the bitcoins. This problem is not specific to PayPal, but all credit card backed payment methods (Venmo, Dwolla, etc.)
Some people have found it possible to resolve issues with PayPal payment recall policy.
Also LocalBitcoins has guide how to avoid this kind of fraud. The sellers have 25% - 50% margin when selling on PayPal, so they can cover up possible losses. Also when done successfully one can profit from the risk, as there is high demand buying bitcoins on PayPal.
LocalBitcoins also has an API, so you can at least half automatize the process, but you still need to have enough buyer audience to make sure there is demand for your bitcoins (there is).