Cashing out to PayPal can be done relatively safely. On the #bitcoin-otc marketplace you likely would have been able to have found a trading partner who wanted LR USD and had a trust history in the #bitcoin-otc Web of Trust (WoT) such that you could trust that a PayPal payment from them.
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http://webchat.freenode.net/?channels=#bitcoin-otc -
http://www.bitcoin-otc.com -
http://www.bitcoin-otc.com/viewratings.phpAnother method would be to convert LR to to bitcoins and then to get PayPal USD redeem those bitcoins at SpendBitcoins.com
An exchange that takes LR for deposits is BTC-e.com. Also does BTCTree.com but they are new and currently there are no sell offers on the book. Antother method that would work is to use AurumXChange and exchange LR USD 1:1 with a MTGUSD redeemable code. Then buy bitcoins with that and go the SpendBitcoins.com route:
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https://www.spendbitcoins.com/convert/paypal/ ($0.30 + 2.9% fee)
Or offer to trade the MTGUSD for PayPal USD 1:1 on the #bitcoin-otc marketplace.
