I would propose that in this scenario the fault is more with you using bitpay than anything else. Sounds like their service doesn't exactly fit your needs. Given the current state of services (bitpay, mtgox) - I think the most forward thinking thing here would be designing your own payment processing software to accept bitcoin as you would then have control over how it works and what features you need / want. Assuming that you could find a decent programmer to design this for you...
...the upside is, if you could manage to develop this, I bet you could resell on some basis to other people wanting to accept micro payments and thus fill a void in the market relative to what bitpay is providing (aka a vpos system where traditional merchants, rather than micro tx merchants can simply sign up and accept bitcoin). Maybe you will become the defacto 'pay with bitcoin' for micro transactions and customers could fund their accounts with you in large amount while you dole out micro payments through more traditional means to other merchants.
I don't normally resurrect old threads like this, but I wanted to comment on an easier alternative to firefop's suggestion to roll your own solution as an alternate method than bitpay: Coinbase. In addition to their buying and selling bitcoin options where they act like an exchange, Coinbase also offers merchant tools. My experience with them is only with buying (sadly not as many as I should have back when bitcoins were cheaper, but oh well, live and learn), but their UI is super clean and I personally have no complaints with them.
The reason I mention Coinbase is that the one time I sent bitcoins with Coinbase, I didn't have to pay the miner's fee. Coinbase paid it. And I'm sure it's a lot worse than 7% for a $1 transaction now since the price of a bitcoin has gone up significantly since you originally posted this thread. So if you're still hurting because of this, I recommend switching to Coinbase, as it would effectively eliminate this problem entirely. Bitcoin to bitcoin transfers are all free in Coinbase, the only time they charge you is when you take money out of Coinbase and transfer it into fiat currency, US Dollars for me. (And they waive even
that amount for the first $1 million on transactions, which ought to last a while.)
If you do decide to do this, I'd appreciate a signup through my referral URL, though no worries if you decide not do this.
I already have a coinbase account, but I clicked the referral link for good measure. I had not kept up to date on this microtransaction option, so thank you for resurrecting the thread with useful information. However, I'm reading through and as far as I can figure the customer would have to be a Coinbase user to get the fee-free transaction. Makes sense of course, but I need to walk through the check out process and see what happens for a non-coinbase user.
For now I'm going to add Coinbase as a third option, and I'll run it through and see how it feels.