I bet your plugin isn’t fully compatible with Woo Blocks Checkout. Please investigate it.
It is compatible with Blocks. We were one of the, if not the first, PayPal plugin to support blocks.
We have many merchants using the PayPal plugin with the new block checkout without any issues.
I switched back to my previous Paypal plugin and no such issue
That probably just means you have your plugins configured correctly to account for that plugin. Lots of plugin settings require that you do something like register the payment gateway before it works correctly. This is very common with currency switcher plugins for example.