Yeah, you need to add the money first, but you're allowed to have it refunded to your PayPal for up to 60 days after you put it in.
The only bit you pay for first is the bid price, then they will deduct the commission and shipping costs (eg to get it to their warehouse and then ship it to you, ideally via EMS) for which you top up again to cover these costs.
I actually got mine on a Japanese-style Buy It Now so I got it instantly, but otherwise you just treat it like a normal eBay auction, except Yahoo Japan is very hard to "snipe" as they have an option to extend auctions by another 5 minutes if there are a few last minute bids! I'd recommend just entering the most you're willing to pay straight away and just let it run!
James.