Hi Seth,
I have made several experimental runs of "clay slip paper insulation" and it really isn't that much different than many forms of "paper clay" employed in ceramic world, or that of "papercrete" type insulation, which in the past I have examined but with lime instead of OPC cements. All of these, if the resources are at a
project facilitators disposal could (should?) be considered. Many of these methods are much more labor intensive, but less cost expensive if we don't count our time.
Balance and harmony in wall mass to thickness is an ongoing discussion even among professional builders, as a wall that is too thick with too much insulative quality (aka straw bale) can have an issue with interstitial moisture build up because of "dew point" condensate zones falling within the thermal envelope of a wall's insulative matrix. This is really exacerbated by modern house wraps and vapor barriers and the use of "super insulated" walls that use cellulose. Understanding and achieve homeostasis in these systems is rather tricky, and many wall (modern and natural) are out there with issues we don't even know we have...because...we can't see them!
Cellulose is a better insulator than straw in general and recycled paper is more sustainable than straw.
Hmmmm....that is perhaps a rather subjective and academically debatable perspective. I am certain sustainability could well be a wash on the paper portion. Paper, has way more in-bodied energies (recycled or not) because of industrial processing than most straws ever will, and depending on the modality of application, the selected R values are similar
enough not to make a remarkable difference.
I like that this is being thought about and if this type of resource is at hand I would get some bag lime and bag clay and do some experiments to see what works well in your climate zone compared to other natural means, methods and materials.
Regards,
j