I've seen plenty of T's kept on paper towels in a local pet store. Even burrowing species. I'm sure they can live in these conditions just fine. Is it a good substatute for their natural environment? Most animals are able to adapt to the environment enough to survive. Will they thrive though?
I'd be concerned about mold when using paper products to keep any but the dryest condition t's. Personally, i try to put more effort than that into designing a home for an animal that it will occupy for years. If it's a younger specimen still growing fast then i say it's ok as long as it likes dry conditions and is arboreal. (Is there such a beast?)