Bitcoin is created for decentralization of funds, anonymity features, fast transactions and all those good stuffs but never to take down Paypal. There's no competition going on. The bitcoin network is not managed by a single company. It never intended to fight against other payment methods that exists. If Paypal starts accepting bitcoin, then it's okay. Bitcoin's not going to mock Paypal for doing that.
We're not talking about ending a system here. Just which do you think is better. But, I agree with you. Bitcoin and Paypal can co-exist. They do not have to kill each other. Both of them has their own purpose.