I have no use for their policies either, but be aware that PP is based in California, the most lawsuit crazy state in the country. If they allowed their service to be used to buy a gun they probably would be sued if that gun ever were used to hurt someone, just as the gun companies used to get sued before a federal law was passed to stop it. PP would have to pay either to defend the suit or pay off the plaintiff's lawyer. It ain't right, but it's the way the system works, and will continue to work unless and until a loser-pays system can be put in place where a losing plaintiff has to pay the defendant's legal expenses including lawyer fees. (Since most state legislatures are disproportionately full of plaintiff lawyers, this will happen on or just before the day Hell freezes over.) So even if PP is run by anti-gun loons, their policy of not allowing use of their service to buy guns probably is a sound business decision, given the legal environment in which they operate.
In addition, PP is a subsidiary of Ebay. You're as likely to get Ebay put out of business as to do that to Google. (Or Microsoft, for that matter, which apparently has a policy against letting gun sellers use their Sharepoint web services software.)
And if you need to take credit cards as part of irregular or small-scale (non-gun) internet sales, PP is the only low price option that I'm aware of. You have to be pretty big to afford your own merchant account with one of the credit card companies.
Bottom line: when stuff seems screwed up in this country, it's almost always because lawyers have gotten involved. (Full disclosure - I've been a lawyer for 45 years, so I speak with some authority on this point. Sadly.)