I have done business with Nick since I first
started collecting several years ago and have had
absolutely no problem.  I will also continue to do
business with him in the future.  He is very propt
to respond to any questions and does pack his
items very well.  However, this is just my
experience and I am not saying that mistakes will
not happen.

You are definately right, it boils down to the
main point of all of this.  The package was under
insured.  There is no way any of us, other than
the two involved, know how/where/when the package
got damaged.  I don't think Nick intentionally
under insured kinsagashi's package because really
the only person he would be hurting is himself. 
It might have been the post office's fault but it
also was his responsibility to double check and
make sure for both of their protection.

It seems to me, now that the story is starting to
come out a little more, that he made a mistake and
is possibly being taken advantage because of it
now.  I think maybe the best thing to do is ask
kinsagashi to send the cels back to him and refund
the total cost for the cels.  Nick can claim the
insurance to try and compensate for any losses.