FedEx won't allow us to ship anything to a PO Box address, but maybe it's different for domestic consignments.

Nah, it's no different domestically.

"PO Box" refers to a box at one of the government post offices.

Despite the word "Federal" in their name, FexEx is not connected with the government. They are a private company and do not have access to the government post office boxes. Same thing with UPS.

Most towns also have private mail service companies which have mailboxes. In my town there's one called "Post Net". The boxes they have there are similar to a PO Box, but they are not technically PO Boxes. They are a drop box at a privately-owned company. I don't know what FedEx and UPS policies are for this kind of a drop box.

I'd hazard a guess that the person who gets his mail forwarded to Chile uses the latter kind of service. So I don't know if he'll be able to take delivery or not. It would be interesting to find out.