That's a good idea Daniel to have Paypal send the notification to me, until I can get Smith Cart working on my installation. Kevin @ Smith asked me to try to reproduce the problem on their own test server to prove it wasn't just my installation, and I was able to reproduce the exact same problem on their own server the first time I tried it. I haven't heard back yet as to what they found or if they are confirming that the problem exists...
My installation is pretty simple, as is the test installation at Smith, so I am surprised this problem exists. Must be some issue with a combination of the manufacturer, category, product, and payment gateway that I have set up.