i am sure those questions are better answered by going to paypal.com

as far as i know, anyone in the world can open an account
i suppose there may be countries where it is prohibited by law
not sure where the money is kept - not in my pocket, i can tell you that
PayPal is a subsidiary of EBay
the US headquarters are in San Jose
international headquarters are in Singapore
notes on interest...
http://www.fivecentnickel.com/2006/07/24/earn-interest-on-your-paypal-balance/personally, i keep the balance low
if my wife were to let it get large (not likely), i would move the money elsewhere
the main reason being you can get interest
and FDIC insurance someplace else