Paper based pellets are fine.   I also used recycled paper  - though it is compressed into hard paper, but there is also this stuff here called carefresh, and it's softer.

Paper based pellets are great, though the softer stuff may not soak up the odor as well. You will find out if the product you bought does okay with that.

It is usually not  a problem at all for bunnies, unless Dougal decides to really consume it like dinner.  Otherwise, it's fine for him to nibble on and eat small amounts.

How's it working so far?

I use Bio-Catolet, which i get from Tesco and comes in a green bag with a cat on the front. (Most pet shops stock it i think) I found it much better than the softer stuff you can get from super markets as my rabbits used to trample the soft stuff around with them as it sticks to their fur, i was forever sweeping up around their poo-trays.

I've used the wood pellets too, but that turns to mush when they wee on it and the same thing happens - i also thought paper was better for rabbits if they were going to munch on a bit.