The 360 Joystick is a fancy 4 / 8 way joystick... so still no go on the paperboy. For that you'll need an an analog joystick (which is why people have been recommending an AKI board, Apac, or an analog gamepad hack.)
Oh and the software that "would" switch the orientation for a 49way based on the game already DOES switch the orientation based on the game, and it works very well.
And just to clarifiy, the 49way is basically like a low resolution analog stick. It detects joystick movement through a 49 point grid. With the GP-Wiz49 encoder, it will simulate different joystick types, 4 way, 8 way, 2way vert, 2way horiz, 4 way diag, circular 16 position (not very useful) and 49 way (which works for arch rivals, sinistar, pigskin 29 ad (or whatever its called)) and with SirPoonga's software, it'll switch based on the game you select automagically. Some people have said that the 49 way works OK in 49way mode with some analog games. I don't know, I haven't tried any yet with it. So a big reason that people are all hot for the 49 ways now is...
1. once you get it set up, it makes it super easy to configure the joystick for the game without having to think about it. Great for guests. They dont' know the difference between 4 way and 8 ways games. With the 49 way stick and the software, it just sets up the controls the correct way for you.
2. The 49way has a fairly long through, and feels nice and soft. Makes it easy to play long sessions without wearing out your wrists. The t-sticks are fairly short throw and some people don't like that. Many people swear by the Perfect 360s, though.
3. The 49way is currently the best compromise between accuracy and flexibility.