I have been using old ups pouches to put my paypal and pbs labels in. Mostly because I seem to have taping issues. Are the PO's scanners able to scan DC inside those pouches?

Yes, they will scan. I would write the address on the package as well just in case the pouch separates from the package.

I also use the UPS pouches for every book I send out and so far have had no problem at all.

So then I guess it's okay that I used a UPS bubble wrap inside out?

i don't think the post office cares if u used ups bubble wrap. as long as you don't use their boxes for ups or fedex.