It's obvious the account wasn't shutdown due to 'gay rights'.
This is like an incompetent woman who was sacked suing for sexual discrimination.
Paypal cheats. Hard. End of story. The more money they can lock up for longer, the more they make. It's a great big moral hazard built right into their business model that creates a disincentive to operate fairly so huge that even Mother Theresa would have a tough go of it.
Squeak whatever wheel needs squeaking to get attention. Even if it's a gay wheel.
There are people who are actually being discriminated against because they're gay.
Using it as a level because your site triggered a stupid 'phone sex' filter via user-generated-content is wrong.
The terms of service clearly state that sites of a sexual nature are not accepted.
This is called a moral hazard, and it should be pretty clear to you.
Paypal has a very long, very well documented history of triggering holds on accounts, and never resolving them.
To the OP: Like so many people, I lost money when PrayPal[0] locked me out of my account. No amount of faxing documents, emails or phone calls would convince them that it was my account and my money. I ended up just walking away.
A suggestion might be to go talk to a gay rights group and try turn this into a civil rights / discrimination issue ... they won't want the bad press.
[0] PrayPal: Put money in and pray you get it back out again.