Is it lawful to send money to someone via PayPal for the purpose of them passing the cash to another person?

As long as the transaction does not violate PayPal's AUP (See https://cms.paypal.com/us/cgi-bi...) &/or PayPal - User Agreement (specifically the section for Restricted Activities - See https://cms.paypal.com/us/cgi-bi.... Restricted Activities.) you should be good.

For a complete list of PayPal's legal speak - see the following page: https://cms.paypal.com/cgi-bin/m...