Do not save attachments

Maybe temporary solution for u would be using scribd uploader http://www.scribd.com/tools
and then just referencing uploaded file in iPaper node.

you want the documents on your site if you want them to be indexed.

It is not necessary to have the documents stored on your website to have them indexed, because the text of the files is stored in the database when they are uploaded to Scribd.
After they are uploaded to Scribd, I agree that they are not necessary on your local site, but I imagine that most administrators will prefer to keep a copy of their documents stored on their server, not just on a third party server.
Maybe in a future version there will be an option for this.

In the current version of the module, you can delete the attachments after you have saved the ipaper node and they are uploaded to scribd. The ipaper nodes continue to work equally well.
If you need to delete all or more of your attachments, you could write some kind of variation of http://api.drupal.org/api/function/upload_delete/6 and run it periodically.

Subscribing, would like to know when this is part of the module...