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Sanitize computer after Homeland Security seizure
If I was the government and I planned on monitoring you, I would do hardware mods that would exist even after a reformat. Might want to visually inspect your circuit boards and such for any funky soldering or chips that look out of place..
Is PCI Compliance mandatory?
There are other merchant accounts then just Paypal. Stripe.com has a Js file that will take the CC info and send it directly to them without touching your servers and then it gives but a CCID to work with. This will allow you to take payments through your own UI without having to regulate the usage and storage of the CC info.
Does requiring users to fill out a PDF w/ CC information and mail it back violate PCI compliance?
pcicomplianceguide.org/pcifaqs.php There is a little guide. I know when I was working for a company that was PCI compliant they were very strict. This doesn't sound like it complies best thing I can recommend is don't fill it out if you feel its sketchy. We had to have any secured communications encrypted. Which.. what you describe is no where near so :)