You will be given a Wordpress template to work with. You don't have to create a Wordpress website from scratch.
You just have to create the functionality of fetching the user data from the form submitted, save the values in a database and displaying it on the front-end. User registration is also to be done through the same form. So that the user can login later. Also, at the end of the form, there will be a form field to decide membership level i.e. free or featured. If the user selects featured level, then checkout using paypal and then display the post on the front-end.
I will give you more details afterwards.