I though of doing the exact same as you stated. I found that flipping the sod over, root side up and a swift swing of a machette will cut almost all sods. I did 4 pallets of Empire turf. Each layer into 36 peices. I had over 4000 plugs, 8"x8".
Another way is to use a chain saw. Stack up 4-8 peices of sod and cut right through it. Its quick but youll mess up the chainsaw.
Back to your orginal question, no, I do not think a paper cutter will work well. The sod is to heavy for it.

To cut through KBG sod, I just used a utility knife with the blade extended about an inch or two. Even though it was a "snap-off" blade, it didn't break at all and was fairly easy to cut with. (I'd still wear leather gardening gloves, just to be safe).

--Gags

Machete has my vote.

Get a nice heavy one with a straight blade and you can whack anything into pieces.

Like this one:
{{gwi:94709}}

Joined Gardenweb so could tell you guys how I cut sod for plugs. CIRCULAR SAW AND MASONERY BLADE WILL GET IT DONE

a kitchen knife... not table knife... cuts easy