I just poked into a few "big bank" credit card companies (Bank of America, Chase) to see what their fees were and both stated a 3% charge for an international transaction. PayPal also states in their user agreement:
3.12 Debit Card Processing. PayPal will process your debit card funded transactions through either the ATM debit network or the Visa/MasterCard network. If we process your debit card through an ATM debit network, we may provide you with the opportunity to switch to a Visa or MasterCard network by clicking the "Funding Sources" link on the payment review page. If you use your PayPal Debit Card for a payment that is not in U.S. Dollars, your transaction will be funded with your U.S. Dollar Balance, even if you have a Balance in another currency. Any required currency conversion will be performed by Visa, MasterCard, or a similar third party and may be subject to a fee by that third party.
I don't think they'd stick a marketing gimmick in their legal documents.
Personally I use a bank transaction with PayPal so I've never experienced this myself (nor would I be dumb enough to do business with a company like BofA).