There is NO reason to get upset about this as there is a very easy alternative available.
Just order the padded bubble flat rate envelopes from usps.com. It's free, and will arrive within a week.
You can order 5,10 or 15 at at time, OR if you have a business account (and for this an ebay ID will be enough), you can order a box of 100. There is no in-between amount.
I got my box a month ago, and am about to order my second one.
The flat rate is $4.95 (no discount). Be advised that Paypal does not yet have the padded envelope in their system as an option. I've been using the regular flat rate option, which is giving me the discounted rate, and have not yet had any package rejected or returned. YMMV. It could happen.
Paypal is notoriously slow in updating their system to be in sync with USPS, so who knows when it will happen.
You can buy the postage as well online at usps.com, which does have the separate option for the padded FRE. Again, there is NO discount for this envelope.
One other note - I recently sent a crammed padded FRE to Europe (4 pound limit), and was told AT THE COUNTER that I didn't need the long form for customs, just the green one, when using the padded envelope. I'm optimistically hopeful when I go again tomorrow that will still be the policy. As my PO had previously required it for the regular FRE (when stuffed), who knows? Again, YMMV.
I hope that clearly and fully answers the questions concerning the new policy/envelopes.