As far as I've been able to gather you can only co-brand the checkout process, but the PayPal documentation is fairly convoluted. Has anyone managed to put a logo on the actual emails paypal sends out?
You can customize the payment pages by specifying header & footer URLs. However, there's no way to change the actual receipt email customers receive.
But, if you have some programming ability, you can
Edit: There's no way to disable or customize the payment notification emails PayPal automatically sends customers after they make a purchase at your store. So the only way to send a custom-branded email receipt without the customer receiving 2 purchase confirmations is to use a proper payment gateway.