CymTyr: Paypal is one of the newer forms of payment on Gamefly, and the reason it wants you to set it up that way is because Gamefly wants to have a payment method on file. You can always go into your paypal account immediately after purchasing a game and take away Gamefly's permission to charge you...
As far as permission with Gamefly itself, I bought a game on sale there a few weeks back via paypal, and GF hasn't charged me anything beyond the game I purchased. They're pretty reputable here in the States to the best of my knowledge.
Mmh, I'll have a look at my Paypal options. If it's possible to revoke access right after the payment goes through it would be workable I guess. Still a very weird way to do business tbh. Thanks for the info though.