Yes PayPal is that "dumb" (it actually isn't dumb.) PayPal doesn't give a crap if you lose money. Investigating hard to prove disputes is costly. The time to investigate it is worth more than their 2% fee. They aren't in the business of losing money.
for some weird reason, ive never heard about this uproar about reversible/refund to paypal in MMORPG ecosystem.
Nope read the PayPal TOS. There is no seller protection for virtual items. If disputed as "not authorized" PayPal will refund it. Period. They won't even ask for screenshots and won't care what "proof" you supply.