The other day we made paper in one of my art ed classes, and while the paper i made is not particularly attractive, it was a lot of fun to do!
The teacher had set up big tubs, and we tore up little bits of paper and put them in a blender with water to make pulp, then poured it into the big tubs. Then we took window screens stretched over frames and pulled them through the pulp to pick up a layer of paper. At this point all you really have is a bunch of wet pulp sitting on a screen, but once you remove the excess water with a shop vac or sponge, it starts to look like a sheet of paper. While the paper is still wet you can shape it in a form to make a little bowl, which I think is really cool even though my bowl is particularly ugly. Either way, once the paper dries you have a totally usable, albeit somewhat lumpy piece of paper.
Anyway, I think it would be a really fun to do this with an elementary class. I think I would use recycled bits of paper to make the pulp instead of buying the special linter paper to start with. I think the activity makes a lot more sense if you use it as a way to take unusable scraps and make them into something usable.
I have to decide what to do with my little pieces of paper- maybe I'll try watercolor on them.