ya i think we are stuck.
with my canadian bank, I can open a USD savings account, which i thought we be good - and then withdraw from paypal to that without currency conversion but as you said ; it doesn't work like that.
if your bank account is located in canada, paypal will only send it money in canadian funds. if you want to withdraw in USD you need to have a bank account in the US with the US format of routing numbers etc on the bottom of the cheque.
if you started getting paper cheques directly from somewhere like SS as your preferred payout method, you could probably skip the conversion fees, i was thinking about doing that when I realized the USD bank account wasn't going to do the trick.
otherwise, just shop online with paypal in USD at US online stores, and then you don't lose to currency conversion but you have to pay import duties instead..