Here are some possibly useful links you may want to consider looking through which you could fire off at this company, not sure how much they will all apply but here goes anyway
(uk long distance selling act)
(uk sale of goods act)
^ possibly a good one as you effectively bought something unfit for purpose i.e bought a service that is unfit for purpose and cannot get use of as the ips are blacklisted)
You have legal rights if you have bought something in good faith that is either 1) not as you expected it to be or 2) not performed as expected.
regardless of whether they are in the uk us or timbuktoo they sold you something that was a dud and that you could not use they need to refund you and I'd use the links above hghlighting your case to both them and Paypal.
I definitely think Paypal will refund it if you word it correctly maybe even using the examples above.
Good luck my friend, sadly not every company is squeeky clean. Hopefully you'll get a refund and be able to find a host that fits your requirements and exceeds your expectations, unfortunately this lot haven't.