Last I checked into it recycling paper and plastics was a net loss. The only reason it was even possible was because people got brainwashed into thinking it had to be done, and the government subsidized it.
Paper in landfills doesn't just sit there. It decomposes anaerobically into a lot of methane, which is one of the worst greenhouse gases. One ton of decomposing paper creates 1.38 tons of C02 equivalents in the atmosphere (
http://epa.gov/epawaste/conserve/tools/warm/Warm_Form.html). The emissions from producing paper (logging, raw material transportation and processing, and pulping) are reduced by 2.85 tons by recycling paper. That's an awful lot of greenhouse gas that is being avoided by recycling, which is good. Do you have figures that show the greenhouse gas emissions of running additional waste vehicles? I'd like to point out that in places like Toronto we used to have weekly garbage pickup and now have bi-weekly garbage OR recycling pickup . . . so we're not really running more trucks than before.
Virgin paper production is one of the most environmentally polluting forms of industry.
http://www.earthgreetings.com.au/paper,-printing--the-environment-i9/. Recycling causes 35% less water pollution according to the EPA (
http://en.wikipedia.org/wiki/Environmental_impact_of_paper#Non-renewable_resources). Reducing that is good.
Trees grow back, it's true. Clearcutting and planting however are still extremely hard on wildlife due to habitat loss. Related issues like soil erosion can cause silt clogging streams and have effects much further reaching than the immediate area. Typically replanting is done of a single species of tree . . . which dramatically effects the biodiversity of an area.
I can't give you a hard figure on how much land we should devote to landfills. Historically, land has always become more valuable as it becomes scarcer. I can't see too many future scenarios where we need less available land, can you? According to the EPA, even with all current recycling going on in the US 35% of the material in landfills is paper/cardboard.