To hand cancel, try to visit your post office during the least busy time (I was told Wednesdays and Thursdays around 2pm are typically the least busy). I've heard many stories about being denied the right to hand cancel, but the post man told me today that as long as it's not very busy, they'll allow it. If they deny you, ask them when a better time would be to come back, but don't get deterred. Come back again with a friend, so you can get them done in half the time.It shouldn't cost any extra to hand cancel, but you'll have to have the correct postage on the parcel first. Then you take the ink-stamp and...stamp your parcels.
(I received my hand canceled envelope in the mail today)
This is a post canceling update. I received my hand canceled envelope today, and as you can see, it was still sent through the machinery at the Post Office. The edge was slightly bent, and the bar code is unsightly, but the card inside was just perfect.
My new thoughts on hand canceling are this: use an outside/presentation envelope if you are deeply concerned about the protection of your invitations; or don't worry and don't hand cancel. The envelope is roughed up, but no one expects the envelope to be perfect, it's the inside invitation that matters. One way or another, it just seems likely that envelopes will be run through the machine despite the hand canceling, though hand canceling is still nice for getting an attractive stamp on the envelope.