If you accept the request to cancel, the transaction ends, the seller gets the fees he paid to eBay for the sale back, both of you are free of the transaction and both of you can leave feedback.
If you don't feel that you can leave positive feedback it would be most polite to leave none at all.
It is a good idea to ask a seller before bidding whether or not he ships to Canada, what the charge would be, and if he uses USPS for shipping.