If you use the gift card method and return an item, the money goes back to your Amazon Balance, not your PayPal account. You’re essentially "locking" that money into the Amazon ecosystem. The Ugly: Potential Fees
You can still earn PayPal rewards points on these purchases if you're using their branded cards. The Bad: The "Gift Card" Tax buy from amazon using paypal
If you keep your "spending money" in PayPal, using it for Amazon helps keep your main bank account clean. If you use the gift card method and
Here is a review of the experience based on the common workarounds: The Good: Flexibility and Security buy from amazon using paypal