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
just disable the default email receipt that PayPal sends out, then use the IPN API to send out your own receipt, which you can customize and make however you want.
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.