Quoted:
At the airport in Seattle, they'll accept the paper license along with the previous normal one . I've had to do that twice. The first time after I moved here when I had my SC license that they punched a hole in and again when I got my motorcycle endorsement.z
In some states (like WI) they print the new license on the spot...
Paper licenses seem to be a WA thing - I actually got hassled for using my paper one on the way back from WI (when I switched over from a WI to WA license), because the TSA lady had never seen a temporary DL before...
For those with a military ID, you may be able to rent a car with the combination of expired DL and valid CAC... Many states have a 'license does not expire' exception for military, so long as you have both the expired DL and the CAC on you...