(Not very much, but even micropayments work with e-gold!)

They don't have the time or desire to monitor all customer websites themselves.

For the paying customer, the key is that the company collecting funds is trusted. An argument can be made that customers would trust BlogAds to securely collect funds.

On the blogger's side, they already trust BlogAds to pay what is owed. How the payment is made is not important, as long as payment is timely and accurate. BlogAds can use a number of different other companies for payout, such as BitPass. This would require bloggers to sign-up with another service, but they will if they know that payment will be timely and accurate -- and that their site isn't going to be subjected to the whims of PayPal.

Interesting. Although, ironically, BlogAds uses PayPal to both collect monies from advertisers and then to pay the bloggers. What this means is that, for every $100 in ads sold, PayPal takes around $6 in fees in addition to the cut taken by BlogAds.

"1. Remove those items from your website that violate PayPal's Acceptable Use Policy. For example, any link to images or videos of terrorsit executions; and"

It seems pretty specific to me. On the other hand, I think PayPal is being stupid. They are clearly equating political speech with hate speech (also mentioned in their TOS).

I thought that the Amazon Tip Jar was PayPal's competition.

Maybe the best solution is that some enterprising bloggers form a blogging collective that collects and distributes fees. BlogAds already has an established payment system, maybe they could expand to tip jars.