Actually, the IPN module works fine with one modification to downloads.php
When downloads.php pulls all the files available for download, just add
AND oders_status = 0
to the SELECT...WHERE statement.
Then set configure paypal_notify.php to set orders_status = PayPal Processing -> Shipped (0) when the IPN is confirmed. This works out fine :)
Incidentally, why is your paypal_nofity.php script different from PayPal's recommended IPN code? I had to replace yours with theirs because I kept getting INVALID results.
Thanks for the great IPN contrib though! It will make a big difference in my site.