I've owned & worked w/ horses/ponies off & on most of my life.This thread has soooo much information, but I'll just put in my two cents that might only be worth one. I use to board my horse at a barn that used shredded paper for their bedding. The BO's husband was a manager at the local paper mill and they were able to get shredded paper in bulk for cheap/free. It was...kind of awful. First off, the smell of paper pulp was so strong in all of the barns, it just about punched you in the face if you were the first to open the doors in the morning. When wet it turned to the heaviest mush you can imagine. It felt impossible to sweep even when dry.
Now, I know using it in a chicken coop is probably going to be different. It won't get wet with urine like it does in a horse stall, but I would never recommend using it anywhere where getting wet is a risk.
I don't remember a lot about that barn other than sometimes when a friend or acquaintance will ask me about the place, and I'll immediately have the knee jerk reaction of, "oh, the shredded paper bedding place!"
You are right. I can not imagine using shredded paper as bedding for large livestock that produces lots of urine. Pine pellets weren't " a thing" yet when we had them stalled. Honestly, I don't like pine shavings for chickens at all. But LOVED them when dealing with horses. Especially at the barn that got them closer to sawdust, than flaked chips.
But in the case of our chickens, I LOVE shredded paper. Our pens & coops are open to the ground - no floors. The paper, other natural materials & dirt (started w/ sand here in the sandhills of NC) all interact w/ each other. The chickens scratch, dig & throw around all that bedding & litter. Poop is "digested" & disappears. What is left is a nice composted material that continues to work where the chickens are or becomes "gold" for the garden.