As Paleo is a framework, there are various opinions about what is Paleo. For me, I am less interested in labels and more interested in what works and is healthy for me. Mark Sisson at www.marksdailyapple.com position is that as long as you can tolerate it, grass-fed is OK. And raw is generally better.
But it is all about experimenting for yourself - in my opinion. We are an science experiment of n=1.
If you want to test for you, eliminate dairy for 30 days, then re-introduce and see what happens. If you don't experience any negative effects, then maybe it is OK for you.
I have been following a primal-style diet for 6 months with very favourable results and don't have a problem with dairy.
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