Can PayPal be used to move money from a US account to a foreign bank account?

As long as the country you operate in does impose a restriction via the central bank, you ought not to have any problem. Issue do arise in some countries (as an example India) where moving money from one US Dollar based account to another US Dollar based account (in another bank) can take 2-3 weeks to settle via cheque.

For larger transaction, PayPal is costly, but like John Levine said, hard to beat that rate for small payments.