OK, I'm going to back up a little. As suggested by kpitti, I'll stick with one question/topic at a time. Seems like a reasonable approach.

I have been using Coinbase since it seemed to be the easiest to use for people like myself, but I really don't feel secure with it - or any other exchange bc I don't understand the technology. I thought I was correct in trusting that my bitcoins were totally secure on a paper wallet, barring my losing it or letting someone get ahold of it or my key. But I'm not sure about that. For example, if Coinbase goes the way of Mt. Gox (some people lost everything gox was holding for them, right?), are my bitcoins lost to me for good? Or is the paper wallet (or equivalent, i.e. usb storage etc.) proof of my btc on the blockchain itself and therefore title to those bitcoins? I apologize if my understanding of all this is totally erroneous!

ps - I'm in the middle of Digital Gold right now, trying to get some sense of the evolution and terminology...