I really like this technique. I've used pulled pixels to achieve background paper, but I prefer the softer look of the blur technique. Thanks for the idea.
BTW - You can 'cut' your text from your new background paper. You can either use 'horizontal text mask' in your text tool option list; or you can clip your background paper to your text layer. You will not need to simplify text to clip it to any background paper/photo.
I prefer to clip rather than use horizontal text mask. It provides more flexibility because you can move the text around the background and you can even change the font after clipping. That is why you do not simplify the text prior to clipping.