Is there any way for a seller to know if the buyer's PayPal payment was funded by MoneyPak? If no, can the buyer prove their payment was sent with MoneyPak (Other than a screenshot)?
No. MoneyPak is simply a "pack of money". Once it is loaded into either Paypal or a prepaid card it is no longer a money pack. Paypal funds are paypal funds no matter their origin. You can chargeback a paypal tx funded by debit card, credit card, MoneyPak, bank ACH, etc. How you funded the Paypal account is irrelevant. All the normal Paypal rules, conditions, and caveats apply. MoneyPak is simply a way to get funds into Paypal or a prepaid credit card.
If you just want Paypal funds Tangible Cryptography will buy your BTC and pay your Paypal account directly faster and cheaper than using a MoneyPak.https://bitcointalk.org/index.php?topic=85395.msg940627
Will PayPal freeze my account if I load up to the $4000 limit every month using Money Paks bought from multiple people or do they care?
Paypal won't have direct knowledge of the location the MoneyPak was purchased. I have looked into getting a GreenDot merchant account so I can accept GreenDot moneypaks as payment and the API is limited. The merchant accepting funds only knows the account#, the pin, the status, and the date it was funded. GreenDot could freeze your MoneyPak if they suspect fraud. Generally speaking keeping your purchases to a single provider or allowing sufficient times between purchases is a good idea. From GD perspective you buying a MoneyPak in VA isn't strange but "you" buying a MoneyPak in VA and CA simultaneously is probably a little "suspicious".
After loading my PayPal account, can I immediately withdraw it to my bank?
Sure. However Paypal terms and conditions allow them to suspend an account anytime they suspect fraud. If that happens (and I have never heard of case) we will gladly send you a scanned copy of the physical card and receipt (always purchased with cash not a debit card) to assist you.
I've heard MoneyPak has about the same amount of protection as Western Union. Is that true? Have you heard of anyone recovering their MoneyPak funds after they've been spent claiming the pin number was stolen.
Once funds have been transfered they are irreversible. Where MoneyPak fraud can occur is
a) buyer pays sells w/ MoneyPak
b) seller releases irreversible goods (Bitcoins, game codes, etc)
c) BEFORE BUYER deposits funds seller reports MoneyPak stolen and MoneyPak puts a freeze on the PIN.
MoneyPak will now ask for receipt and physical card for proof. Something the seller has and the buyer doesn't.
There is an element of trust (less than say gift cards or credit cards though) so you should trade with someone you trust. We hope to convince customers that our reputation is worth more than proceeds from one sale. Our first tx on Bitmit was for $800. If we wanted to just steal funds there is unlikely to be a better single target. Still ultimately it comes down to trust.