I was curious if it is legal to sell custom scripts and utilities for PayPal?
An example could be something like a direct credit card capture script or other easy to integrate payment tools.
Selling custom scripts and applications isn’t illegal, just think of all those e-commerce carts that support PayPal payments… those are customized and the packages are often paid for services. PayPal’s API was designed so that people could create a whole architecture of ways to use their payment system, their certainly not going to complain if people are commercially creating solutions or new ways to make use of their system (PayPal’s money comes from transfer fees) 
Awesome, for some reason I thought stand alone apps and modules were not permitted. I guess there is nothing different when selling a stand alone script opposed to a module embedded into a unique system.
There is a tab at the top of the PayPal site for “Developers”.
Like iPhone, they are looking for people to develop apps.
The Paypal sandbox is available for developers to test their Paypal integration scripts without needing to use live Paypal accounts.