Set custom order status for complete PayPal Website Payments Standard payment?
The big problem is, there is not even a single event in the whole paypal work flow.
So there are two options:
Rewrite any of these Paypal models
As you said, just rewrite the model, change the behavior and everything works as expected - hopefully or...
Hook into sales_order_save_before
Then you check for the payment type, which should be \Mage_Paypal_Model_Standard::$_code
with:
protected $_code = Mage_Paypal_Model_Config::METHOD_WPS;
\Mage_Paypal_Model_Config
-> const METHOD_WPS = 'paypal_standard';
And then, when the status is changed to the one you don't want, change it to the one you want.