I just bought a waterproof cover for my camera and when paying with mastercard using Paypal, by default, they do the conversion and charge you in Canadian $.
Their rate was 1.009.
The current rate is 1.06.
So in short, the item would have cost me 5% more if I'd let paypal handle the conversion. Needless to say, I chose to get my credit card billed in US dollars.
YMMV, but it's probably worth checking on before you hit the "pay" button.