I was recently in this situation on the other end. I won an auction, then mailed a USPS MO via regular mail. The seller didn't receive it in the normal 3-7 days, etc. As stated the PO won't do anything about the MO for 60 days. After 30 days they can do a 'trace' on the letter by sending something to the recipients PO, several other POs and to the postal inspectors. I guess in case the letter got stuck to something and made its way to timbuktu accidentally.
So what I did was make a copy of the MO receipt and mailed that to the seller to make sure it would make it and I had his address correct. When confirming his address, it turned out I had made a mistake on his address when originally mailing payment. The MO receipt copy did make it to his correct address in normal time and the original payment actually did make it to the seller about a week later. I was off by one digit on his house number, so it must have been his letter carrier recognized the name and the 'close' address and delivered it.
So, I guess the moral of my story is maybe ask to see a copy of the MO and to confirm the address he has for you. As long as the buyer isn't pushing you to send the knife b4 you get payment I wouldn't worry yet.
But on the other hand, as the buyer he is trusting that you didn't get the payment and are scamming him. Either way, nothing 'official' can be done for 60 days.
I have always liked the security of usps money orders, but never realized their limitations until recently, that of the time delay if something goes wrong. That delay is difficult to swallow in our immediate gratification internet world.
Hmmm, if only there was a way to send and receive money instantly through the internet......
Oh yeah, paypal

Just kidding, I know a lot of people have issues with it for a variety of reasons
