There really is no exact definition of a paper champion as it really comes down to circumstances. I believe that if a fighter wins a title by not beating the actual champion, cause they leave, vacate or retire, they have a little more work to do before I can see them as the definitive champion. They are the champion technically, but it's still got the "paper" feel.
To me, a fighter needs to defend the belt and then I see them as a legit champ. So if Jon beats Stipe tonight, I will see them him as the definitive champion. And if Tom beats him then there really is no debate.