Paperclay as in greenware, leather-hard, bone dry and kiln fired?
I tried once before in ceramics class, the thing was so small, but it survived. The texture was awful though [I was using cinco blanco] and it shrunk a lot.
Most people here use polymer clays for sculpting custom heads, particularly Super Sculpey firm. Its really easily workable, and stays pliable until you're ready to bake. I still have unbaked heads started from like 8 months ago that I can fiddle with. Just keep everything in a little box so dust can't get on them. Afterwards you can cut and sand the pieces, or score and add on new parts. If you're accustomed to using fibreclay already, then polymer clay will make you happy. The stages are easier and the baking time waay shorter, plus when you drop it, it usually doesn't shatter or chip [fragile parts like ears might, or add on parts might break off if you didn't score well enough].
I also use regular Super Sculpey in the flesh tone, and sometimes Sculpey 3. Stay away from Original Sculpey, its rubbish.
Another option is Fimo clay, which a sculptor named Tony Barton uses. I used it a few times but didn't like it. If you do use it, don't put it on anything painting in acrylic/latex house paint as it eats through it. [My desk can attest to that D:]
Other options are apoxie [Aves Apoxie], green stuff, or miliput, which air dry I believe, and are usually used for additions to sculpts like beards and hair or parts on armour/rifles etc. Smaller scale modellers use them for entire figures or so I've heard, and some 1/6 customizers have made arms and whatnot out out of the latter materials.
There is also wax, but eh, I have no experience in that, though there are a couple of amazing sculptors who use it for their pro work.
Hope I've helped a little bit, if you want to use the paperclay then it should be ok. Just be sure to make it slightly larger than 1/6. Some experimenting might have to be undertaken to get the size right. There is also an air drying kind but it always left little cracks and stuff in my work so I didn't like it. Good luck!