i think you need a paypal credit card to do this offer
You don't. You have to enable your account for in-store purchases. They mail you a plastic card that you can use, but anyone that accepts Paypal in-store should have an option to log in with your phone number and a created PIN.
Anyone use this yet? The other offer had an area to check the offer on, don't see it and am a bit nervous about making the purchase and finding out that it didn't actually get credited.