My common-aw wife uses PayPal/eBay so when she wanted to add bank account to her PayPal she grabbed direct deposit form for my account by mistake, added that bank acc. And two days later PP did deposit two small amounts and she verified it.. we use my account more often anyway

Well she wants to take money out of her PayPal but we're not sure if my bank will accept that transfer, from her PayPal to my bank account since name is different.. PP did deposit two deposits to verify bank account so I'm not sure if process is the same for withdrawal too?

Is the account a joint account? It probably doesn't matter though. Since she did not respond that the deposits were not valid, the account has been associated to the paypal account. Paypal doesn't look at the name on the account. They make the 2 test deposits to confirm. If the Paypal account holder doesn't report a problem they assume everything is go.

Not a joint account, even though we both have debit cards to it, but we assume since PayPal made two small deposits and they made it to the bank that withdrawal should too. As far as I understand it's up to the bank to accept or reject incoming funds but I assume when making two small deposits PayPal sends it same way as they do when withdrawing funds (so to the NAME and ACCOUNT number)?

If the two small deposits went through then the withdrawal will be fine. It's all done by bot, not people scrutinizing accounts. You can't lose your money (except if you type a wrong email on an eBay listing, then you have to either open an email account using it and add it to Paypal or call them).

If I was a problem, then it would be a issue at the validation process, Does she not have a ATM card for the paypal, you just go to a ATM and get cash, that is the fastest process.