While any excess consumption of the three macro-nutrients (fat, carbs, protein) can be stored in adipose tissue theoretically, butter (fat) is the LEAST likely to be stored as fat. So yes, enjoy butter with out guilt.
Try to find 100% grass-fed/pastured butter in your local stores/farmers markets.
Yes! Enjoy that much butter every day and more!
Try to find raw butter from grass-fed/pastured A2 cows (find locally). If you can't, then try to find raw butter from grass-fed/pastured A1 cows (Organic Pastures). If you can't, then try to find cultured butter from grass-fed cows (Kerrygold).
If you are interested in learning more about the question of dairy fat in the "paleo" diet (i.e. is dairy compatible with Paleo, that is, with a Primal version of Paleo?) I'd recommend the website of Kurt Harris, M.D., "PaNu Blog."
Harris recommends the use of dairy fat as a substitute for carbs, and doesn't regard the high fat dairy sources (i.e. cream and butter) as particularly problematic.
Of course it's not "technically" paleo...but I eat/cook with about a stick a day and it appears that lots of other paleos eat plenty of butter as well. Personally, it gives me tons of energy. It really comes down to a choice of fat or carbs for the majority of calories...and fat is the best choice. No need to ration butter IMHO.
To be clear: the proper "paleo diet" doesn't allow dairy, as dairy is a recent invention and it causes allergic reactions in 75% of the world's population. However, butter and hard cheese are the best of the dairy bunch.
The dairy thing comes from Mark Sisson's "Primal Blueprint" and not Loren Cordain's "Paleo Diet"