However I also read that one user mentioned that they only take a 1% or low fee. For this reason, it might be worth it.
I have serious doubts in that number. The lowest ever BTC ATM fee I saw was 4% (same ATM now has 6.5% fee), and I am using them from 2017. One of the reasons why BTC ATM fees are not small is due increased expenditures: Owner has to pay the renting of the space, machine itself (and machine ain't cheap at all (afaik 2 way machine costs more than $10k) and on top of that, owner has to pay the taxes. So yeah, I don't see how 1% fee is possible.
I know I am speaking out of ignorance, but I thought the way it works is, you pay them for the bitcoin, and they give you a paper wallet
Not really. Let me quote my previous answer in this thread:
The way it works is simple: you choose on ATM the amount of BTC you wanna buy ( for example $100 worth of BTC), then the machine scans qr code of your wallet so it has the address where BTC will go, and in the end you insert the bills in the machine and that's about it. BTC will be sent to your address and you will get a receipt.
One thing I did not consider is that you would be able to sell BTC for cash at these ATMs. That is fairly interesting, since any other way usually requires jumping through a lot of hoops. That makes me wonder how easy it would be. If it is as easy as it seems, and without providing personal information, then it would seem like a great idea, as long as they don't take too much as fees.
Procedure of selling BTC is simple as well: You choose the amount of BTC you wanna sell ( usually its some round numbers like $100, $200, $500 etc) and when you choose the amount, QR code of the address where you have to send BTC appears on the screen. You take your mobile wallet, scan the code and send BTC. When you did that, you get a piece of paper on which is another QR code which you will scan on BTC ATM once transaction gets few confirmations (ATM I am usually using asks for 2 confirmations). If I am in a hurry I use higher fee to get it done asap, but usually I just go in a bar and have a beer while waiting for confirmation.