The root issue here as far as I can tell is that regretsy is promising some kind of action (in this case buying a "mystery gift" for an unknown family) and Paypal has no way to verify that this is actually happening.
You are fine as long as you don't explicitly promise something. There's no way to claim you are running a fraudulent service if the money is out of goodwill for no purpose. There will be very few chargebacks to Paypal that claim "I gave jfruh a tip for nothing in particular, and he used it for something in particular."
Thus, I would also like to echo this sentiment that Bitcoin is worth pursuing.
I'm not sure why anyone would downvote Bitcoin.
All these "use bitcoin" responses are as useful as "let them eat cake".
Those that want to donate with bitcoin can easily google how to buy it, and will discover it's easier than ever to acquire. (in some cases, using paypal!)
No. The downslide took considerably longer than that.