Yes if you deal with a big amount the difference can be big (like +$1,000 while making a 1
BTC deal in your example).
But when you think about it, it's just a 10% difference in the price. And of course, you can't expect to see people selling at the current price because, after all, they are there to make a profit
If it wasn't so easy to fraud with Paypal and people were more honest, it wouldn't be like this. Unfortunately, Paypal protects the buyers more than the sellers generally speaking.
Firstly, the risk of a chargeback when using Paypal to buy bitcoins is extremely high, I would say at least 20% of the time stolen/hacked Paypal accounts are used to purchase bitcoin, hence the vendor needs to increase their fees to cover the likelihood of a future chargeback.
Secondly, Paypal appear to be very much anti-crypto. If you open a dispute with Paypal after purchasing bitcoin, they will almost always side with the buyer, even though it is a digital item. Another problem for BTC sellers.
Lastly, Paypal has fees of over 3%, hence this needs to be added to the margin.