Canada's paper and pencil system works not because of the lower numbers of people but because voters make only one mark on the ballot. We place an X next to the name of the person we want to elect as our Member of Parliament in our riding. The party with the most members wins and thus their leader becomes the Prime Minister. With only one choice per ballot, the boxes of votes can be dumped onto a table at the end of the day and counted while observers from the parties watch.
This would be impossible in the US, where you also have to choose members of congress, state reps, attorney generals, governors, judges, etc. Using the Canadian counting method would take many hours.
The real problem is the US voting system. If you didn't have to vote for positions such as state attorney general and Lt Governor and just relied on the governor to fill these positions, as the President does at the federal level, and then separated federal and state voting, then the system might be as simple as Canada's and thus paper and pencil might be a suitable technology. But given that the US will never change from its complex system, an electronic voting system is all but inevitable.