I have the same issue. The person at PayPal's customer support first told me I should be able to change it myself. On my Profile->Payments screen there is no such option (anymore - I am the one who changed the setting 4 years ago and I want to change it back). It took a half hour (30 minutes) for the representative to change this for me. How exactly is this an efficient use of resources? There is no FAQ that covers this - that would certainly be helpful. How easy it would be to add a question "Blocking international payments" and "Non-business users do not have the capability to change this themselves - please contact or customer support team for assistance."
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