If you can leave your crap there, you can leave the toilet paper too.  Both will degrade fairly rapidly.

Much of this is aesthetics rather than impact.  No one wants to find tufts of toilet paper scattered about a portage landing, but the presence of the paper will have minimal impact on the local life forms.  

Crap:  Depending on where you are, there are several ways that I consider acceptable:

A:  Buried in the active top soil, 50 meters away from nearest water.  This can be as simple, as lifting a slab of moss, doing your business, and replacing the moss.  Going a couple inches deeper is better form.  Try to avoid making your personal pit in a runoff channel or hollow.  More likely to have seepage into nearby water. 

B:  Move a log or rock.  Do your business.  Put hte rock back.  Talked to one ecologist who was working in a subalpine meadow.  He advocated leaving a corner of your toilet paper to poke out from under the rock.  By the time the paper disintegrates, the rock is ready for reuse.

C:  Smear your crap thinly on a large rock.  This exposes it to bright sun which will destroy most of the microbial life.  The sun rapidly dries the crap, and it gets redistributed by the wind.  This method requires separate disposal of TP.

Methods for getting rid of TP:

A:  Dispose of it with the crap.  (All but C above)
B:  Carry a lighter.  Burn the toilet paper, waiting until it is out completely.
C:  Bring back to the fire for disposal.

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Caveats:

I see this as mostly a non-issue.

The only places I've heard of that this is such a major problem that the above strategies are unworkable is on river rafting trips where there is repeated camp use, and very little room to go elsewhere; and on that oddball combination of a major trailhead that doesn't have installed latrines.  

If a region is sufficiently crowded that I have to take more than the above precautions for crap, or cannot build a fire, then my inclination is to go elsewhere.  (Ok:  If I meet someone else on a trip it's too crowded..)(Those of you looking for such places, I suggest Willmore wilderness in Alberta; and for paddlers, the MacFarlane river in Saskatchewan.)