What this question does lead to is this:

Would it be fraud/illegal/worth it to open a paypal business account, and bill your own credit card x amount of money for x miles, paying the 2.9% rate plus the per transaction rate?

I can't find anywhere in their terms and conditions, after briefly reading them, that would say you couldn't.

I would go with no to fraud, and no to illegal, unless it is against the T&C, although even then it wouldn't be illegal.