well if you are having attacks less often or see any improvement in how severe the attacks are, then the paxil is working. it should be expected that it won't completely get rid of your attacks anytime soon...but that it's a work in progress and will take quite some time to completely get over the anxiety. it also may be something you'll manage the rest of your life...but the point of meds are to help. there unfortunately isn't a cure for general anxiety....the best thing to do is start exploring cognitive therapies in addition to the meds.
Yes, it can definitely come in cycles. Remember as in life, there are ups and downs with any experience. We all have good and bad days; in my experience we tend to overemphasize every little thing because our nerves are so sensitized to everything and it can be hard to grasp. BUT, and this is a big but, you will see relief as you learn more about this. Focus on the long term rather than the short term...keep us posted!