I'm not sure about US law about income paid into a US bank account. I would guess that the US would probably tax you at US levels but that is just a guess. I also presume that you'll have to file a normal tax form but you probably need to speak to a tax specialist about it rather than relying on the board.
You do have to declare that you're a US citizen here for tax reasons when you open a bank account so that the US Govt can watch your $'s and tax you.
Another good reason to be British. No double taxation laws
I'm not a fan of paypal especially on international transactions. They charge you quite a bit and also give you a really crap exchange rate for international transfers and take a week in transferring the money too. Plus with chargebacks you can lose all of it anyway.
Don't p*ss me off! I am running out of places to hide the bodies.