Some butcher papers are treated with a coating, some think it is merely a wax coating. The coating may not be wax, but could more likely be a thin polyethylene coating. Either way, wax or plastic coated papers are not really suited for cooking food in them. They are designed to seal the meat in a manner to prevent loss of moisture for short term storage or freezing. You do not want to use coated papers!!!!
The preferred butcher paper has no coating of any and is thicker, denser, and heavier in weight. Uncoated butcher paper will allow the meat to breath while it speeds up cooking time and keeps the nice firm bark you desire.
Some people will tell you to get paper from Home Depot that they cover new floors counter tops to prevent marring and damage but some of these papers are treated with rosin. Others will also recommend the use of craft paper or even the use of paper bags. The issue here is that because of production standards/processes these papers are not rated safe for direct contact with food. Many will tell you that these are ok to use because they have used them years, they don't get sick, they haven't grown a third eye, and all is well. Some people will pick food up off the ground and claim the 3-5 second rule while others are more comfortable letting the dog have it or just throwing it away. The bottom line is: you will be the one using the paper and only you can choose your level of comfort in using these different papers.
Yes, uncoated butcher paper is rated safe for direct contact with food, and yes it is safe to cook in the paper in a hot smoker. Paper unless modified by other chemicals doesn't burn by itself until about 450 degrees Fahrenheit. As long as the paper isn't exposed directly to the flame, hot charcoal, or hot embers, the paper should be fine in a smoker under 380 degrees.
I have cooked with foil as well as butcher paper in the past, but now I prefer to cook without them. It's merely a personal choice which revolves around your level of comfort and your time schedules. There are occasions when target times have to be changed or times that do not permit a lengthy cook and I have to use the paper.
In the end, paper and foil are just tools that can be used for the cook to achieve the product he/she is comfortable serving to others. Don't do something because others do it, but rather because the end result is what you desire.
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