It's relatively common to use paper negs for alt processes. I've been meaning to try it but just haven't yet. Most folk do wax it first so yer on the right track John.
If you look for the alternative mailing list archives on the web and search the archives from the last year (2003/2004) I know it's been the topic of discussion at least once.
Why not lith film though? There isn't much price difference.