Can shredded paper be used for insulation?
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Answer it!
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If you must use paper, I have made 'papercrete' blocks- basically paper mache with a tiny bit of cement in, the samples I made have been stored in my loft unprotected for about 4 years now without any degradation- and I know we have mice that have nibbled other stuff up there, including plastic. the cement (add a bit of sand too) will probably act as fire retardant.
personally I would scavenge some styrofoam or bubblewrap and use that.
. Try these searches: homemade fire retardant, paper +insulation
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