Yes, Nomex is 4x more expensive compared to mylar or polyester.
Papaer is a traditional transformer insulation. It is supposed to be a fairly high quality paper - high clay content perhaps? I have heard that some Chinese transformers use recycled newspaper - about the lowest quality paper made, very hygroscopic.
On the sound quality compared to other insulation materials?
Does it have an impact or can it be overcome with winding topology..
Soft paper may allow windings to move slightly so allowing some transformer noise and possibly distortion. Hygroscopic paper will attract and retain moisture which could allow electrolysis to occur wherever the windings have a crack in the wire insulation - the result will be shorter lifetime before the transformer develops a shorted turn.
The right sort of paper will work just as well as any other insulator.