Your "bottom line" statement is understood, and indeed Zen Cart does not impose that limitation, and PayPal doesn't normally pose that limitation either unless you don't want to give up your seller-protection for the transaction. ie: if the destination address isn't a paypal-confirmed address, then paypal won't protect you as the seller if there is any dispute in the transaction ... doesn't matter whether it's express or IPN used to do it.
I'd like to see your store's PayPal logs from that attempted transaction. Those should tell some information about what Zen Cart received from PayPal about that customer's status, address info, and seller protection eligibility, etc. If there's anything we can fix on the ZC side, we'll need the logs in order to know.
I've attempted to replicate the problem but can't, so I must be missing something, and hopefully the logs will give clues.
Granted, if you didn't have the debug logging enabled then there won't be any logs.
http://www.zen-cart.com/forum/showthread.php?t=61199
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