Thanks. I did some version of this. I changed CO shipping to include a .27 fee and stated "Includes a .27 Retail Delivery Fee" so it is just the CO customers who pay that now. Thank you for your suggestions!
I'm no expert on this but from what I've read, they won't be enforcing the itemisation for the moment because sales platforms, including Squarespace, need time to catch up. Until the platforms do catch up, the majority of businesses can't display it as a line item or automatically collect it from customers.
Regarding workarounds, all I can suggest is to manually add the fee to the each shipping cost and mention it in the shipping description, for example "includes 27c Retail Delivery Fee".
Technical workarounds aren't possible because you won't know whether a customer needs to be charged the fee until the customer reaches the checkout page and selects shipping (instead of pickup). As code isn't allowed on the Squarespace checkout page, we cannot add an itemised fee after they select their shipping/pickup option.