Love the packing thought and topping with grass!I love my shredded paper in the nest boxes but I also top it with dried grass and then just toss all in the compost when ready to change.
I have seen & read Shad and maybe gtaus using it for bedding material.
I use it for packing boxes for shipping, filling small paper bags to stuff in voids. Thought about making nesting pads with it, not permanent as it is not washable.