I tried that already, and it worked for the most part, but for some reason even though all required field validators are disabled, it still is requiring Zip Code. (That must be turned on elsewhere behind the scenes.) So what happens is the State displays a value of 0 in the email page, and the zip code shows up.
I understand everything you're saying and I do have my setting just as you mentioned. Per my question above though, are [FIRSTNAME] and [LASTNAME] in the cart settings page Shipping or Billing names? thank you.