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Here is a short summary of the problem:
Here are some things we suspect and think:
if(ship_weight <= 1.0) { allow USPS First Class Package } // incorrect, should be 13oz not 1LB
if(ship_weight < 1.0) { allow USPS First Class Package } // also incorrect, should be 13oz not 1LB
if(ship_weight < 368.545) { allow USPS First Class Package } // correct, should be 13oz not 1LB
if(ship_weight <= 368.544) { allow USPS First Class Package } // correct, should be 13oz not 1LB
Here is the full documentation in a Youtube Video which shows how we arrived at these conclusions after inspection:
Without looking into the account, I am not 100% sure what you should do. As a video demonstration does not always allow me to see everything.
So the first issue is that you say, Shopify itself has an issue. IE: Shopify shows first class on checkout pages for products NEAR 1lb when it should not
So the first task is to resolve this issue. I do not know what you need to do, but contact shopify support to resolve this issue.
Now, with regards to the feed, it is annoying that the weights are always converted to grams, there is no way to avoid this, unless you manually change it, or create a custom metafield and submit it using an app such as: https://apps.shopify.com/multiple-google-shopping-feeds
However, I have never had an issue with submitting in Grams and calculating shipping rates in OZ.
I recommend you disable the automatic shipping rates in the Google Channel app, which you show in the video. So set it to manual.
Then in Google merchant Center manually set the details. Either with OZ or maybe better with grams. The end result is that the shipping rates in GMC need to be equal or an overestimate compared to the checkout.
You can check what GMC assigns by going to Products > all products > select a product > scroll to the bottom and view the final attributes.
What you can also do is submit shipping prices directly in the feed, which you can do with the above mentioned app. Which might be more accurate, as the details are calculated within Shopify. This will overwrite any settings you have in GMC. As it is now a product level rule, which overwrite settings.
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