Once you encrypt the wallet, and print your paper backup, importing the wallet via the paper passphrase will NOT import your previous password. That would be why the paper backup states that anyone with the keys on the paper would have unrestricted access to the wallet.

If you're looking to spend, you would still only require your wallet password as normal.

Armory would still use the blockchain, and so I believe that if it were unsupported you could still use it, but the security holes and what not that could arise would not be patched. Using unsupported software is generally a bad idea, as updates to the Bitcoin protocol may require updates to Armory as well.