Can merchants using processors like BitPay or Coinbase shield themselves from Bitcoin’s exchange-rate volatility?

You are safe as far as volatility is concerned. If you accept Bitcoins with say BitPay and want them to be converted to US Dollars, when a sale is made, the prevailing exchange rate would be applicable and your Bitcoins would be exchanged for USD. This money can then be wired to your account. There is no volatility faced by the Seller (that's the whole point).

You can read more at: Bitcoin Exchange Rates