Paypal not disguising purchases

No.

Or just open another bank account.

I believe you can still also link a debit/credit card to your paypal account to make purchases.
It will just show up a generic paypal transaction on your credit/debit card statement.

If people can access your internet banking without your knowledge; you have far harder problem than them finding you've been ordering stuff on amazon or staying in hotels!

I may be wrong here, but the OP may have to provide bank statements to some person/company/authority and just wants to have a clean looking statement without any requirement to go into details about unusual looking transactions etc. If you are explaining you are losing and all that.

Is it not possible to insert another level of isolation between PayPal and your primary bank account? like a credit card or another bank account etc.

I like to keep my primary bank account very clean soo that I can produce big beautiful statements from it without notice, if ever required. I have other secret accounts, credit cards etc. for all the funky stuff.