To answer your question, yes, it's proof of shipment, but NOT proof of DELIVERY, which is what PayPal needs to see in order to protect you from Item Not Received (INR) claims from buyers. When it comes to sending international parcels, shipments through First Class Mail leave you vulnerable to INR claims even if you certify/register the shipment. The reason is, foreign postal services will not update the delivery status of the shipment when it is transferred over to them.
Personally, I believe the USPS explicitly instructs foreign postal services to not update delivery status of shipments that are not sent through either Priority or Express Mail, in an effort to encourage U.S. consumers to use these expensive methods of shipments, rather than the cheaper methods such as First Class Mail. I have evidence (although not concrete) of this in the two following ways:
1) At the USPS website, you can print shipping labels for any class of mail for domestic shipments, and are encouraged to do so as it'll give you FREE delivery confirmation (tracking), but can only print labels for Priority Mail or Express Mail when it comes to international labels. Why won't they allow the printing of First Class Mail international shipping labels? The answer is to discourage consumers from using this method, and choose the more expensive (Priority or Express) options of course.
2) In years past, various international postal services such as Canada Post for instance, did show full delivery status of First Class mail packages sent from the U.S. on THEIR (i.e. the Canada Post) website. Now they no longer do that, as I'm certain the USPS has instructed them to explicitly not do this, as it rendered the need to send packages to Canada from the U.S. via Priority Mail or Express Mail meaningless.
