I’m using shredded paper in my compost bins and also mixing it with potting soil in the bottoms of pots I’m planting. This stuff is so finely shredded and the worms love it so I figure I might as well spread it around in the yard instead of putting it out with the recycling. I can’t think of any reason why this isn’t a good idea, but time will tell.
P.S. In reading this post I realized I need to clarify a few points. If I put it in the compost bins then I just throw it in there. If I put it in my planting beds then I’m burying the shredded paper so it doesn’t show. Plastic crabs and life-like iguana aside, I do try to maintain a little decorum in the garden!!!