Okay, I was making things too complicated. All you need to specify are the 
annual average exchange rate for the currencies at the beginning of each 
year:
P 2011/01/01 00:00:00 CAD $1.010
P 2011/01/01 00:00:00 EUR $1.390
P 2011/01/01 00:00:00 GBP $1.600
P 2012/01/01 00:00:00 CAD $1.000
P 2012/01/01 00:00:00 EUR $1.290
P 2012/1/1 00:00:00 GBP $1.58

Then just write the entries as:
2013/1/28 From U.S. Dollar To Euro - Paypal Currency Conversion
 Assets:Paypal Account   10.00 EUR
 Assets:Paypal Account  -$13.82
 Expenses:Currency Conversion Fee  

The conversion fee will be automatically calculated using the annual 
average exchange rate specified.

To verify that your currencies are correct run:
$ ledger pricedb

The balance with -X CAD is also correct now and there is no more need for 
the "= expr commodity" statements

Cheers,
Andrew

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