Are you a lawyer? Because it doesn't look like users are actually required to hold PayPal harmless in the event of property loss due to bad counterfeit decisions.
So there's that.
I think that tossing a coin and using reason are different, and I believe that a court would uphold my expectation that reason was used. Paypal will then have an opportunity to present their reasons. In this case, IMHO, it would appear that a "reasonable standard" of "reason" was not used.