Shopify has a "custom order fulfillment by email" option under Fulfillment Services. Basically, here is what it does:
"Custom order fulfillment requires just an email address. This email address will be sent an email when you choose to ship an order. The email will include all of the required shipping information, perfect for drop shippers!"
This is adequate if you only need very basic drop shipping support. However, you may want to consider eCommHub if you need to be able to do any of the following:
From looking at your diagram, it seems that eCommHub doesn't handle the PayPal checkout exactly like you described. However, I think it should be able to automate much of your current process.
We just released eCommHub 1.5 a few days ago (Feb. 28, 2011). We're doing a free open beta through April 2011, so you may want to check it out: http://ecommhub.com
If you or anyone else has questions about eCommHub, or its functionality, then please feel free to ask.