You can sell physical items through any method you want, including paypal. 
You can even sell some part of a service, such as those credits you 
mentioned. The policy is very very clear that the only thing you absolutely 
HAVE to use the "In App Products" service to sell are actual features in 
your app itself. If Blizzard made a WoW app, there could be an option to 
pay your WoW bill from the app (as long as that isn't all the app could 
do). For physical items though, I'd suggest using google checkout. Google 
bots won't be so quick about assuming you're doing something wrong. 
Checkout charges *30% *for* In App Purchases*, but for* physical items *they 
charge* 2.90% + $0.30.*

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