What we need is something that looks and acts like paper, but also captures the user's input and provides a sort of intellisense for math.

Something like the child of a kindle and a plam pilot (or wacom tablet). The OCR and math-lookup part would be really hard but potentially really interesting.

I still prefer pen and paper for notes, sketches, and mockups - I find the process of writing the thought down imprints it much better in my memory than typing it and that helps me comprehend the problem better.

The title here needs an exclamation point, because is not "a rule", as in a noun, but rule, as in a verb, in the slang sense.