Is it bad form to sell someone a digital download, say through paypal, and then once the order is received just email them the download instead of providing a link to the download?
Yes, it is bad. I'd be sure to NEVER buy anything from such a site again. In my own personal experience, I buy a download when I need something in a rush. If I want a book, I'd usually head to the bookstore - if I NEED a book, I'll buy an ebook. And if I do infact NEED a book, I don't want to wait til the webmaster's gotten out of bed, or in from work.
For information on securing your download files, see the following link
(Towards the bottom)
For information on processing payments with PayPal, do a Google for:
Using, for instance, PayPal, PHP, MySQL and a little .htaccess it isn't that big of a job to create an non-tangible goods store AND secure your files at the same time.
Stay clear of tutorials that promote making a randomly named copy of your original file, the htaccess tutorial at the link above, combined with a Database can restrict access to users who have been authorised.
Hope that helps.