Dave has nailed it. The only significant difference between paper and plastic-based silver gelatin medium is that the RC paper is translucent, and the spectral sensitivity of the paper's emulsion is actinic with an additional bit of green.
To see what a sheet of print paper would see with a paper negative sandwiched on top, place a paper negative face up on a light box, you can see that the entire range of tones within the emulsion is clearly visible.
When contact printing a paper negative, the print paper is emulsion side up, on top of which is the paper negative, emulsion side down. Thus the two sheets are emulsion-to-emulsion. The light source diffuses through the translucent RC-coated paper negative's backing, giving a similar effect to that of a diffusion enlarger.
Paper negatives made on FB paper typically show the texture of the paper from a contact print; contact prints from RC paper negatives are generally free from such artifacts. I use Freestyle's Arista brand grade 2 RC paper for my negative media.
I don't know of any specific paper being made today with a watermark. They may be out there, but I'm not aware of them by specific brands. I think this is an "old wive's tale" (or rather, old man's tale) that's floated around the photography community much too long.
The images posted here were scans from the paper negatives. However, they contact print very nicely. As for the direction of orientation when contact printing, the reversal of the image, left to right, happens the same as when contact printing a plastic-based film negative, which is also contact printed emulsion-to-emulsion with the print paper.
The only additional manipulation required for scanning a paper negative (other than reversing the tones) is to perform the left-to-right reversal in post, to simulate what happens during the contact print process.
Last edited by Joe VanCleave; 04-10-2011 at 12:51 PM. Click to view previous post history.