Huh. Is that "Stand" canon? (ie, the earlier introduction of paper)? I ask because... that's kind of a non-issue. The reduction in power of the Catholic Church occurred in no small part because of the rise of humanism during the Renisiance, which in turn was powered by a number of social and economic forces.
And yes, one of which was the relatively cheap ability to produce written works. Another major influence was a series of plagues in the 1300's which killed off a number of folks, which left a huge amount of money floating around to be invested, and also made it necessary to write techniques down instead of teaching them to a student. Another was the rising literacy rates in the middle class, due to the rise of the university system, as well as Cathedral/Parish/private/public schools that were feeding into them. (Which, in turn, were caused by the increasingly-large national government's need to have administrators who knew how to read, and for the Church to have literate priests.)
However, the cost of a paper versus vellum was only a small part of the cost of book-making. The vast majority of the cost comes from the fact that they are hand-written, and thus labor-intensive. Paper was already used in the 1200's, for example, during the rise of the Medieval university system - college students used them to take notes and make personal copies of their own books. It was a cheaper alternative to vellum, but wasn't considered as high a quality. Paper itself was well-known in the near-east, and was what Islamic scholars had been using for hundreds of years.
In contrast, it was the PRINTING PRESS, with the ability to rapidly print out broadsheets, that was the important invention. And previous versions of the press had already existed - it was the improvements in metallurgy and metal-working (Gutenberg was a goldsmith) to make the type fonts, as well as an improved screw-press (which was originally for....grapes, I think) that allowed the printing revolution to be started. And yes, the reduced cost of paper versus vellum was part of that. But by no means a key reason. These inventions occurred mainly because of the economic demand - which wasn't based on the high cost of vellum - it was based on the fact that a hand-copyist could only create a few pages a day.
As such, having cheaper paper wouldn't have kick-started the Renisiance a few centuries earlier. It would have gotten a few more people literate (or more literate then they already were), but there were a number of economic forces that would also have to have been in play in order for that to occur.http://en.wikipedia.org/wiki/Printing_press
EDIT - to clarify: the formula for cheap paper wasn't "discovered" by Europe - they already knew how to make it. It took a number of outside economic forces that made it profitable to look for cheaper ways to make books that caused people to look to paper as an alternative to vellum. it's the other way around: cheaper paper didn't cause increases in literacy: rises in literacy caused people to look for ways to make books cheaper.
EDIT II - and the "formula" for cheap paper isn't a formula - you make cheap paper by building a water-powered paper mill. Manual paper mills were already in Spain by 1085 (via Islamic cultural influence), and by 1282 they were setting up an actual water-powered one.http://en.wikipedia.org/wiki/History_of_paperhttp://en.wikipedia.org/wiki/Paper_mill
EDIT III - and I'm pretty sure this wasn't intentional on your part - but I happen to know a decent amount about this particular period of history (via research done for Ars Magica, one of the best historical-based RPG's out there), and the cost of paper was barely even a factor of the many, things that contributed to nonexistent literacy rates amongst the peasantry in the 12th century.
EDIT IV - Hm. Well, in researching the topic a bit more, the consensus seems to be that prior to Gutenberg, (at least in Europe), it was all about woodblocks, which don't do well at all in multiple printings, and are relatively expensive to make. Asian printing technology had bronze castings, but they were dealing with thousands of characters - Lain-based phonetic languages were much better-suited for printing. In contrast, Gutenberg's invention of metal typefonts, as well as a way to inexpensively make them (via his matrix and hand mould), were pretty important. Also, he developed an ink (and an inking process) that worked much better on paper than anything else at the time. And he also figured out the (retroactively obvious) idea that you can separate typesetting from printing - this allows a typesetter to set a page, print it, and then not have to set it again. Instead, they could simply put the block of typefont into storage, which makes re-printing a book relatively trivial. But doing so required that you have lots of cheap fonts, which goes back to the "cheap means of producing the fonts" idea. So it was all of these ideas (some big some small) that came together for Gutenberg.
As such, introducing a cheap way of making paper at an earlier date (to be used in a woodblock press) wouldn't have increased literacy rates (and political activity) among the peasantry. None of the peasants knew how to read, anyway. It was the nobility and middle class that were able to take advantage of the educational opportunities of the middle ages. Therefore, cheaper paper would mainly have allowed the middle class to own their own copies of, say, Plato and Aristotle, or would have made it cheaper to take notes in class. The only peasants that could afford education were the borderline "I'm technically a peasant, but only in name" - and those folks were a pretty darned low percentage. Having cheaper paper wouldn't change that, as the cost of education is for the instructor and the time the children spend away from the fields. It would require the next 400 years of Industrialization and socioeconomic growth that would allow a peasant enough disposable income that they could consistently afford to send their children to school, as well as the changes to culture that would start to support and encourage universal (and inexpensive) primary education.
Which, again, isn't specifically directed at the rest of your story - but it was that detail which pulled me out and said "no, that wouldn't happen." Kind of a bump in the narrative road, as it were.
I appreciate your enthusiasm for the subject. Several movable type printing presses had been built before Guttenberg's machine but they had not caught on due to the relative scarcity of good quality, inexpensive paper. Once that issue was put to rest, the movable type press became a lot more useful. And to answer your initial question; No, this is not canon for The Stand, it is me constructing a reason for the Angel of Divine Vengeance to drop the hammer on an entire world.