I tested the above solution...and there is still an issue:
When you add only downloadable products to the cart, you get free shipping.
When you add only tangible products to the cart, you get quantity based shipping.
BUT....
When you add both downloadable and tangible products to the cart, you get free shipping.
So, I am resorting to adding a weight to EVERY SINGLE PRODUCT and only use Paypal profile based shipping by weight. I will give downloadable products a weight of .01 and set the paypal shipping by weight for .01-4.99 lbs = $0.00 shipping. Then I will give all of my other tangible products a weight of 5 and set the paypal shipping by weight for:
5-9.99 = $2.99
10-14.99 = $3.99
15 and up = $4.99
This will make it so if someone order 1 tangible product shipping will be 2.99. If they order two tangible products, shipping will be 3.99, etc. If they have a bunch of downloadable products also in the cart, it will only add .01 lbs for each item and shouldn't change the weight.
YAY!!!
I wonder if you give every product a weight. The downloadable products would have a weight of .1 and get free shipping. All other tangible products could have a weight of 5 or something. I think I tried that thought and Paypal didn't recognize the total weight in the shopping cart. hmmmm.