You have to look at how the handling fee is used:
MODULE_SHIPPING_USPS_HANDLING
Currently, it takes the (cost + handling) * boxes
PHP Code:
'cost' => ($cost + MODULE_SHIPPING_USPS_HANDLING) * $shipping_num_boxes);
You want to change that:
MODULE_SHIPPING_USPS_HANDLING
1 what to do on number of boxes
2 what to do on per item basis
You have to experiment a bit with your products as weight determins number of boxes ...
And Handling is currently charged per box ...
You can base this on setting the Handling to either the 5.00 and then alter the calculations to compute a "new" Handling based on number of items in the cart ...
Then apply that amount to the cost for this ...