With Paypal's history, I normally keep clearing them to my bank as they keep reaching a certain limit of say $1000. I mean I know it is stupid and misses the entire point of Paypal, but I would rather do this than my account being frozen.
After you clear to the linked bank account, you need to be sure to move the money into a second account, as they are permitted by the terms of service to attempt to withdraw from your linked bank account any and all money they deem necessary up to the total amount received for all transactions for a good deal of time. I strongly advise you link a non-primary account for this reason.
Wouldn't they just attempt to withdraw it from a now empty bank account, leaving you with overdraft fees?
EG let's say you have $100 in your paypal account, which you send to bank account A. From there, you send it to bank account B, leaving bank account A empty. Paypal decides to withdraw $100 from bank account A, leaving you with -$100 on A, and $100 on B?
Banks don't do negative balances. Some banks will automatically turn overdrafts into loans or withdraw them from another account, to prevent you from having a withdrawal or debit denied, but you can generally disable that "feature". In the absence of that, an attempt to withdraw more than an account contains will result in a denial of the withdrawal and possibly a fee (either to the withdrawer or the withdrawee or both, depending on the circumstances and what the bank thinks it can get away with).
In any case, moving the money to an account PayPal doesn't have access to puts you in the much better position of PayPal having to ask you for money, rather than you having to ask PayPal to give your money back. At that point, at most they can lock your PayPal account (which still screws you out of any more donations made before you can say "stop sending money to this PayPal account, you're donating to PayPal").
This can happen with Australian banks. However, the process used by Paypal to clear funds to Australian banks (known as the Direct Entry Payment System) is actually easily blockable at the bank level (ie, you can tell the bank to block all future direct debits from an individual merchant, assuming either they've already done it once, or you know their Direct Entry Code). Blocking it in this way won't even cause fees at your bank, although it might with Paypal...
I should know - I do this for customers at my bank every day. I'm not sure, however, whether this would also stop Paypal paying money into the account. I'm fairly certain not, but I've never had to stop someone paying money into an account before...