Paypal only covers (insures) things in certain categories. Unfortunately cars are not one of them, there is no coverage for vehicles at all, no matter the circumstances.
Ebay/Paypal (same company anyway) won't get involved, they will provide details to the police if requested though. Is there an actual legal obligation to advertise a car as a non repairable write off in the state it was sold in? The hard bit is that you are not in the same state by the sounds of it, so fair trading/small claims will have limited jurisdiction too.
You can leave feedback but may not be able to do much more. You know you can use ebays system to request another users details if you have dealt with them ie name address and phone number as well as email address. Presumably you paid by bank deposit? The bank may be able to help. If you paypal paid using a credit card your bank may be able to chargeback if fraud is involved.
At the end of the day it is buyer beware, if you are buying something sight unseen from interstate, the price you pay (or should pay) would be lower than from a private sale or dealer so that is some consolation. What I don't really get is why a car is deemed non repairable rather than repairable - lets face it anything is repairable if you invest the money and the time so who are they to tell you it can't be done. Normally you get a check done to ensure it is safely fixed and all is good, so what's so bad (should have been obvious) with this car?
Feel free to PM me if you need some advice on this sort of thing, I've fought scum like this before and won.

