I think, if you were to call the guy and tell him, you have to send the money order back. Your Bank has issues with it and for "Peace of mind" you are sending the money order back.
I am Canadian and have bought stuff in the US using both Canadian and US money orders, never had an issue but I can get to a US Post Office in about 30 imnutes from my home.
Call the guy, at the very worst, he is not happy but gets his money back and you are not out parts and have no money to show for it
Good luck