Selling newsletter ads in the auction - good or bad idea?

I am finishing an online competition directory where registered users can choose an option to receive a newsletter. My idea is to send them regularly tips for the most popular competitions and in the bottom include a sponsored message.

As the the website is new and I don't have too much experience with email marketing I am not sure how much to charge. I checked out similar existing websites and their prices var significantly. So I am thinking about running auctions starting at $0 to let the advertisers decide a fair price.

As many of you have much more experience than I in this area I would appreciate your opinion about:

1. The idea to sell the newsletter advertising in the auction.

2. If you believe it is a good idea do you recommend to use some established auction server like eBay or run the auction on my own website (it is no problem for me to write a php script for this purpose). What are the pros and cons of these solutions in your opinion?

3. In case of running the auction on my own website do you think it is a good idea to use PayPal as a payment method or would you recommend some payment wall like 2checkout? I am asking that because I have heard many times to mention the people that they were cheated - they provided the service, the client made a chargeback and PayPal did not help.

Thanks for your opinions!