Following on from my comment above, the rules are not clear and are therefore open to interpretation (and Apple's interpretation always supersedes anyone else's)
11.2 Apps utilizing a system other than the In App Purchase API (IAP) to purchase content, functionality, or services in an app will be rejected
A gift card could be interpreted as a service, PayPal interpreted as a system other than IAP
11.3 Apps using IAP to purchase physical goods or goods and services used outside of the application will be rejected
Therefore you can't use IAP's to purchase your gift cards
11.13 Apps that link to external mechanisms for purchases or subscriptions to be used in the app, such as a “buy” button that goes to a web site to purchase a digital book, will be rejected
Here external mechanism could easily refer to alternate payment providers, so that rules out using PayPal.
As you mention giftcards, the following clause may also be relevant as a gift card could be interpreted as a credit or even a virtual currency
11.4 Apps that use IAP to purchase credits or other currencies must consume those credits within the application