I got my answer from a buddy that worked for the USPS. Then I googled "Optical Character Reader" used by USPS. Here is what popped up. Very informative. I guess France and parts of Europe do not have such stringent requirements.
All Caps is the best format for the machine readers. In the present case you could also use the 9-digit zip code:
Preferred fonts are
SF SANS SERIF
TAHOMA. They don’t really like calligraphy. My best bet is to slap a printed label on.
The best answer is: do not use calligraphy styled letters , as Postal automatic machine-reader can not read it properly ! So simple, so true. Calligraphy is not belonging to the proper addressing of the letters. It also is very much true, it is even difficult for human Postal sorter to properly read it, and put yourself in the place of the Postal sorter, you need to sort out thousands of various letters, codes, names, cities, and calligraphy certainly will not help you, it will be annoying, depressing, and waste of your precious time. So at the end, if you want your letter arrive in the safe hands of receiver, do not apply calligraphy. Always write in tidy manner with proper space between the lines and the individual letters and numbers.
Thank you for your input Pedrag. I did figure this out (see above link to USPS) after researching and also asking around. It seems the most expedient way for mail to get to its destination is to do what you describe.