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Jason,
I don't think he'd really turn you in, but if it's against eBay's TOS, then why would you continue to tack a 5% charge on?

Especially being that the charge is (as I understand) only 2.9%?
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Correct on all counts. Except, if you only have a personal account with PayPal, there are
no charges at all.
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The Buy It Now option is almost useless with the scammers clicking on every auction and mass-mailing bogus money orders outa Nigeria and Russia.
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That's where only accepting PayPal as a payment method works to your benefit.