Agreed, especially since the seller is the one that pays PayPal in the first place. Kind of makes you a little paranoid to sell on eBay, no? At least without a confirmed address disclaimer. eBay (not PayPal) even has a specific 'paid from an unconfirmed address' reason in their unpaid item dispute menu.
It is pretty clear that this is designed to get more people to upgrade their accounts (so they cost money to use), get a paypal credit card, or something like that... I haven't actually looked through all the options.
I've got to wonder if I'm covered on something I sent out yesterday: the person was confirmed with an address the post office doesn't recognize (eg. newyork city instead of New York City). Of course, you can't print a shipping label online (and get the discount) for an unrecognized address. So, I put a space in the town name so I could print the postage/label. PayPal then informs me that you must ship to the address on file to be covered. Grrr