Just to add to this... I tested this out and the customer can navigate to the My Account and click on the Forgot Your Password link. It will then send a password to the customer.

It would be nice if the store could send a welcome email and a temporary password automatically for those few times when a customer doesn't register prior to paying with PayPal. For now, I have to send instructions on how to retrieve the password which adds another layer to my customer service work.