From a business perspective it's a sound move. It generates more profit from eBay sales. It get's more people familar with Paypal, which will see an increase in customers using it in other formats (Boots online for example) and it cuts down the number of eBay Buyers getting ripped off.
Whether it's legal or not is another matter!
On a side note, It was only the late 80's/early 90's that M&S started to accept non M&S's credit cards! The reason they started accepting other cards was due to customer demand, so maybe that may have an effect here, but I doubt it.
If I buy from eBay I want to pay via Paypal as I know I'm safe. So from a buyers perspective I'm happy with the change. I'm sure some sellers will feel differently but retailers need to look at the changes through the buyers eyes.