First of all, using CanadaPOST for shipping to USA is pure madness since CanadaPOST does not and cannot provide tracking beyond the border. SO, for all your shipments to the USA, You should use another company-- UPS, FEDEX, and DHL are the biggest.
There is an alternate source we found to be very good and quite cheap also -- about 35% cheaper than UPS and FEDEX ---> the company is called CANPAR (http://www.canpar.com). The great thing about CANPAR is that they are partnered with FEDEX Ground Service, so all CANPAR shipments going to the USA are actually delivered by FEDEX Ground Service --- something FEDEX will not tell you nor will CANPAR...we found out through an inside source. Anyways, this is one way to get FEDEX Ground Service with tracking info online for 35% cheaper than signing up with FEDEX directly.
There are a few things to know thou, CANPAR Service within Canada is not COST EFFECTIVE for places like Saskatchewan, Alberta, Edmonton and BC for these areas you should stick with CanadaPOST because CANPAR rates are alot higher almost $10 more than CanadaPOST.
As for your issue with PAYPAL, we have a similiar issue but the amount was for two hundred dollars -- the buyer first opened a dispute claiming the item we sent them was SIGNIFICANTLY DIFFERENT we fought the claim and eventually won - one month later paypal again froze the funds advising us that the credit card the person used was used without permission and the credit card holder was denying the charges and VISA chargebacked PAYPAL who inturn tried to get the funds back from us which they did they went and froze the money immediately -- we fought back and showed them that we shipped to confirm address, we have person telephone number and first name, and we provided them the CANPAR tracking number but what won the case for us was the FEDEX online delivery confirmation report which showed the address delivered to match the paypal confirmed account address.
PAYPAL re-creditted our funds 24hrs later, but I stilled sent them a nasty email telling them that they were a bunch of crooks for freezing the funds in the first place. Never did get a reply to that email.
Remember your paypal insurance and ebay insurance is only for $1250 cumulative within a year period which means for example if you file five claims for $300 each, PAYPAL and/or eBay will only credit you back $1250 in total -- you lose $250 and also, if you file those five claims within the first 3 months or 5months --- your done for the remainder of that year.