If he is eating every single piece, I would be tempted to take it away. Eating paper isn’t harmful, and my two will grab a big piece of paper and swallow it down, but too much can cause them to eat less hay, which is bad of course. Have you noticed him eating less hay since you’ve given him the phone book? Maybe it could be a “sometimes” toy that he gets for short periods of time, so that he doesn’t gorge himself on it all day.

As far as I know totally harmless. The ink I’ve heard is soy based and fine, and mine get phonebooks regularly. They certainly eat some but mostly shred and dig it. I’d ditto that if he’s eating it like it’s going out of style, maybe not a good thing…but eating some is fine in my book