The effect of cutting Bitcoin exchangers off of Paypal:
1) Users will still trade Bitcoins for Dollars.
2) But now they will be individually paypalling those dollars to each other, instead of using a central service.
3) Seems to me that if you have a supercomputer, and you have access to Amazon's transactions, and you have access to the block chain, then this move makes it suddenly much easier to associate block chain transactions with paypal transactions.
4) Basically if this came from higher up, the purpose was to make the block chain traceable.
5) Anyone receiving dollars in Paypal has a verified identity, taxpayer ID, bank account, etc.
I think it's time for Bitcoin aficionados to consider anonymity layers...
I agree.