I just tried out-of-paper handling.
When the printer runs out of paper, I get a bubble telling me, and the statusicon reflects the problem, which is great.
But the job status in the job list is still just 'Processing' without and indication that something is wrong. I think it would be good to show some status indication there, too. Likewise in system-config-printer itself, where the printer icon indicates nothing wrong, and the printer status is 'Processing - page...' I have to go to 'Ink levels' to find the status message telling me that the paper ran out.
system-config-printer-1.1.13-3.fc11 has been pushed to the Fedora 11 stable repository. If problems still persist, please make note of it in this bug report.