Just an update, this got solved, on the 10th of June. My guess is that since there are so many transactions and so many customers, fixing such errors takes a lot of time. What would help is getting regular updates pro-actively from PayPal, and when calling them, to get consistent answers. However, working in Support industry myself, I understand that high turnover of people in the support teams can lead to situations when there are information gaps in such large organizations. In the end, I am glad it was solved, and that I didn't depend on the funds that were stuck.
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