I've thought about this before and it makes sense to me. While I'll concede that if the power intensive manufacturing process is powered by fossil fuels it would likely be carbon positive, I don't see how it could possibly be anything other than carbon negative if the power was from carbon free sources (hydro or nuclear).
To restate the premise, you plant trees for the purpose of harvesting for paper in the future. The trees grow and absorb carbon. You cut down the trees and make paper. By using nuclear power, there is no sequestered carbon released from the manufacturing process. The paper is put into a landfill instead of recycled. In the landfill it is sealed off from oxygen and unable to release the carbon. Thus, the carbon that the tree absorbed is sequestered away long term. A new tree is planted and the cycle repeats. With each cycle, the carbon content of the paper is locked away in landfills instead of re-released.
Recycling won't sequester any carbon long term. It will only contain the carbon currently in the cycle. If we think about an ideal situation where all paper is recycled and there is no new paper added or removed it becomes clear that the total carbon locked up is (carbon in trees) + (carbon in paper), which won't change. With storing paper in landfills the total locked up carbon becomes (carbon in trees) + (carbon in paper) + (carbon in paper in landfills). Since the first two won't change (actually total tree mass may increase since there is a need to replace the paper), the fact that carbon in landfills will be continuously increasing shows that total carbon locked up increases.
This idea relies heavily on the idea that the power comes from carbon neutral sources, and that trees are only harvested for paper if they are planted expressly for that purpose.