I agree that the paper wheel is not only an advanced idea, but was a good idea.
Adding the paper web to the wheel effectively adds another (better than a steel web) spring/damper to the car's suspension that would help to isolate noise.
The problem, of course, is proper engineering of the composite paper matrix, and the bolted joint designs between axle and wheel and wheel and tire.
At the time of their invention, paper wheels were probably beyond current materials engineering capabilities, and thus the mechanical design suffered along with it (read: potential problems with heat and high speed).
Shoot, even today composite flywheels aren't a trivial design task.