Has anyone had any luck setting up a Hotspot. Using Usermanager to authenticate either with mac address or whatever means.
Then direct users to paypal, have them purchase time, and automatically credit the users new account to allow them online.
All this without any intervention?

HotSpot+User Manager + Paypal supports username/password login without intervention, as it provides sign-up option.
Look at the wiki documentation for HotSpot+User Manager configuration for such setup.