Far as balance goes, a single wood log can currently be made into scrap, and then produce 6 paper (or be made directly into paper for 3). So it's adding 13% to the library stocks - which could be adjusted for by reducing the paper output in the press.
I was mainly thinking of providing a more substantial reason for requiring smooth wood as a reagent for scrap wood production - it didn't make sense to me initially. From a paper making focus, making something useful out of the bark is a good reason to enforce the workflow of removing the bark first, before scraping & pulping it.
When focusing on paper, without a useful byproduct to smoothing wood, it stood out as being busywork.